Wendy Posted March 14, 2008 Report Posted March 14, 2008 New client today presented a dilemma - at least for my brain dead state. Elderly man - home in his name. Marries a widow more than 5 yrs ago and transfers the house to a Simple Trust (XXX Family Trust) with husband & wife as beneficiaries 50/50. Have to go to assisted living and sell home. He "expects" to exclude the gain. Can he? Trust owns house.... Any illumination would be appreciated. Thanx Wendy F. Katz, EA Quote
jainen Posted March 14, 2008 Report Posted March 14, 2008 >>Trust owns house....<<.. Finally I get to say something non-controversial that favors the client. A family trust is another name for living trust. Because the grantors can revoke it, it is ignored for purposes of income tax. Apply Section 121 in the normal way. Quote
BulldogTom Posted March 14, 2008 Report Posted March 14, 2008 Jainen you old softy.....are you sure you can't find anything to ruin the client's day? Jainen is right (as usual). So long as the trust is revokable by the grantors, it is ignored. The clients own the home, and can take §121 exclusion provided they are otherwise eligible. Tom Lodi, CA Quote
Wendy Posted March 14, 2008 Author Report Posted March 14, 2008 Thank you both. I have not seen the trust documents, but this will make his day. Wendy Quote
Wendy Posted March 14, 2008 Author Report Posted March 14, 2008 But another thought.... Since the home was in his name only prior to transferring it to the trust, that would mean that only he qualified for the exclusion. Right? Wendy Quote
jainen Posted March 14, 2008 Report Posted March 14, 2008 >>only he qualified for the exclusion<< Good news #2. Section 121 only requires one of the spouses to meet the 2 year ownership test, as long as both meet the 2 year usage test. Quote
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