Discussion:Bypass trust valuation
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Discussion Forum Index --> Tax Questions --> Bypass trust valuation
| 20 August 2008 | |
| I did search topics, but I couldn't find anything on point, so here goes:
Home went into A/B trust at DOD of spouse 1 about 75% B and 25% A when house was worth about 500k Spouse 2 dies a few years later when house worth about 650k. I figure total basis as follows: B = .75 x 500k = 375k A = .25 x 650k = 163k However, about 50k was spent between DOD 1 and DOD 2 on improvements. Since the A portion is already figured at the second step up amount, I think there is no adjustment. But for the B portion, the improvements were done after the first step up. It seems reasonable to take 75% of the 50k and add it to the B basis. Does that make sense, or am I missing something? BTW the attorney says everything gets stepped up, and the basis in total is the 650k. That doesn't seem right to me. Any thoughts or ideas would be appreciated. | |
| 20 August 2008 | |
| Unless the executor made a QTIP election on the B trust, it doesn't seem reasonable to step up the entire basis of the home to $650,000. | |
| 20 August 2008 | |
| agree. income interest in B trust would not be self created. Problem with who actually paid for the improvements, and from my point of view taking money out of the credit shelter trust for that purpose would have been inadvisable. | |
| 20 August 2008 | |
| Thanks for your response.
Riley - If I understand you correctly, you're saying the attorney is wrong, that the whole basis does NOT get stepped up, but the piece in the A trust does. Is that right? Dennis - Are you saying that the improvements do not increase the basis of the B trust unless they were funded by the B trust? Peter | |
