Basis in property transferred from trust.

[Ranger]

Client’s father left farmland in a trust. Client and two siblings are trustee’s. Trust transferred land to client that was valued at $300,000 on date of death. Client also assumed a mortgage of $100,000 on the property.

I believe the basis in the property to the client is $300,000. Can anyone prove me right or wrong?

Thanks.

[jasdlm]

Was the Trust a Grantor Trust at the time of Client's Father's death?

[Ranger]

It was a grantor, living, revocable trust up to the time of his death. After his death, the trustee’s were authorized to handle the assets as they saw fit. A portion of the property was transferred to the oldest son. Under normal circumstances, basis would be FMV on DOD, $300,000.

The twist here is that the son also assumed the mortgage on the property, $100,000. A closing statement was drawn up for that amount. I believe the basis should be $300,000.

If the transfer had been made from a living person, it would have been considered part sale and part gift. I am not aware of any special rules that apply to a trust.