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CAPCPA
CAPCPA
Level 2
February 24, 2024

1041 Realestate Sale

  • February 24, 2024
  • 1 reply
  • 6 views

Recent death in family, created trust with rental properties.  Completed a certified appraisal for step up,  but now selling properties at much lower value.  Is that a tax loss on 1041 and passed through to the beneficiaries?    

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    1 reply

    sjrcpa
    sjrcpa
    Level 15
    February 25, 2024

    Are the sales arm's length?

    Is there a reasonable explanation for the sales price being less than date of death appraised FMV?

    The more I know the more I don’t know.
      CAPCPA
      CAPCPAAuthor
      Level 2
      February 25, 2024

      Yes - completely 3rd party sales,  I believe higher interest rates and the fact these were rentals (not in pristine condition) has lowered their true market value.   Trust does not desire to invest in the properties, to upgrade or remodel dated areas. 

       

      sjrcpa
      sjrcpa
      Level 15
      February 25, 2024

      Then yes the sale produces 1231 losses on the 1041. These losses will only pass through to the beneficiaries if it is a final 1041.

      The more I know the more I don’t know.
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