Basis step-up, Sec. 1014

Technical topics regarding tax preparation.
#1
Skatter  
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Boston area
The crux of my question relates to the meaning of the phrase "acquired from the decedent" as it appears in IRC Sec. 1014(b)(9) and Reg. 1.1014-2(b)(1).

In the following scenario, has the property been acquired from the decedent?

A transferred her vacation home 10 years ago to an irrevocable trust of which her children were the trustees and beneficiaries; there are no provisions in the trust document that would make it a grantor-type trust and no provision that specifically allowed her to continue to use the property. She nonetheless continued to use the property as her own until her death, paying all expenses for repairs, maintenance, and improvements. I'm pretty sure IRC Sec. 2036 will result in the value of that property being included in her estate. If it is included, will the trust get a step-up in basis? Has the trust acquired the property from the decedent? To me it seems that the answer is "no" since it already had fee-simple title to the property.
 

#2
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10-Jun-2019 4:20pm
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WESTERN USA
She nonetheless continued to use the property as her own until her death, paying all expenses for repairs, maintenance, and improvements.

Search implied life estate. One of the first Tax Court cases that allowed "implied" interests was Linderme 52 TC 305 (1969).
 


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