SALE OF PERSONAL RESIDENCE OWNED BY REVOCABLE TRUST

[sheree]

Taxpayer has Revocable Trust.  Personal Residence was purchased by Revocable Trust, and used as a personal residence for 14 years.  House sold in 2019 by Revocable Trust.  1099S issued to the Trust.

Is the gain on the sale of the house taxable to the Trust.  

[abctax55]

Revocable aka Living Trusts are disregarded entities of income tax reporting.

[sheree]

The taxpayer that started half ownership of this house died, and the assets in the trust have remained, except for the required distributions, so since the death, does that make the revocable trust irrevocable?  And now taxable to the Trust.  using my Pro Series Software 1041 Home sale worksheet, and answering the questions correctly, (was not inherited) it adds the gain on the sale to the taxable capital gains.  Also the other half of the house sold, owned by a living taxpayers trust, has the 1099S reported to the trust EIN number, which has other income that is not distributed, and the trust has been paying the tax.  Can she bypass the tax since she has lived there until sale date?

[BobKamman]

When did the first grantor die?  This was probably a cookie-cutter trust document that used boiler-plate terminology appropriate to the days when the estate tax exemption was under $1 million, but not since it was increased.  Try to wade through the trust document and figure out if the whole thing became irrevocable at the first death, or just half of it.  If the trust document says the assets should be divided into two separate trusts, try to find out if that was ever done. (Hint:  Usually not.)  Why does the trust have an EIN?  Not needed unless it is irrevocable, or a new trustee is appointed.  

Has the trust been filing 1041's before this year?  What has been reported on them?  Have the property taxes been deducted anywhere?  I feel sorry for people who think a living trust solved all of their estate-planning problems, until I remind myself that they did it to themselves.  

[abctax55]

 except for the required distributions

This implies something OTHER than a revocable trust exists.  

As Bob says, a careful reading of the documents is order. By someone with an understanding of trust issues/interaction.