Hello All,

My client, who is both the Trustee and a Beneficiary (1 of 3 beneficiaries) of a House owned by a Revocable Trust that became an Irrevocable Trust upon the passing of the Grantor, sold a house in 2021.

Does the sale of the home owned by this Irrevocable Trust qualify for the Home sale gain exclusion of $250,000, according to the following explanation?  And if so, who reports the Sale of the House, the Taxpayer on his individual Income tax return or the Trust?  Form 1099-S for the sale was issued to the Trust with the Trust Tax ID, so I thought it would be reasonable to report it under the Trust.

Thank you!

SW

https://www.law.cornell.edu/cfr/text/26/1.121-1

3) Ownership -

(i) Trusts. If a residence is owned by a trust, for the period that a taxpayer is treated under sections 671 through 679 (relating to the treatment of grantors and others as substantial owners) as the owner of the trust or the portion of the trust that includes the residence, the taxpayer will be treated as owning the residence for purposes of satisfying the 2-year ownership requirement of section 121, and the sale or exchange by the trust will be treated as if made by the taxpayer.