1041 - Sale of primary residence by trustee
Situation - Grantor created a living trust in 2014 and the only asset in the trust was his primary home. He passed away in 2019 at which time the living trust became an irrevocable trust. The Trustee sold the property in 2021. With CA property values going crazy, there is gain above and beyond the step up value. Questions:
1. Can the Trust get the benefit of $250k of Sec. 121 exclusion. Some articles suggested that the exclusion is available to Trusts if it would have been available to the Grantor.
2. If "yes" to Q1, will this be on top of the step-up?
3. Lacerte has no check boxes for sale of home and the use test on the 1041 returns like it has for the individual returns. Any suggestions on how to put it thru the software if this is a legitimate deduction?
4. For any residual capital gains, can it be distributed to beneficiaries, or does the Trust have to pay the taxes at the highest rate.
Thanks in advance for your participation.
