Simple property basis question on transfer to trust

As we all know, with some clients, getting information is like pulling teeth - though I understand their side of it - they pay attorneys and tax preparers to handle it for them and they don't understand what I am asking them.

I have a new one with an irrevocable trust that was not a grantor trust.

A condo was transferred into the trust some time ago and was first held out for rent just last year (2019).

The trust has never filed a tax return.

I asked the client several questions and for the documents to compute the basis in the rental property, and all I am getting is:

"A gift tax for $246,100 was filed when the condo was transferred to the trust in 2004."

Can I assume that the trust did not pay the "seller" for the value of the condo, so the owner (seller) of the property had to file a gift tax return?

So if the trust paid nothing for the property, is the cost basis $0?

But my spider senses are telling me the basis will be $246,100 because they "paid for it" with a reduction in their unified gift credit?

But why does the trust get that basis when it technically paid $0 for it?

The basis is the giver's basis. It should be listed on the gift tax return along with the $246,100 FMV of the condo at the time of the gift.

pretty much, but a bit more complicated. Different basis for things like depreciation, gain or loss on disposition. You should be talking to the attorney not the client. Idle curiosity...how was the condo used and who was paying the expenses?

Yes I gave the simplified version.

Client should have a copy of the gift tax return.

Every so often I point out the importance of knowing not only how the trust but why it was created. This one was likely in preparation for medicaid eligibility. Settlor would have retained a life estate, with the interest valued at zero under §2702 and the gift at fmv.

We have no idea whether settlor is alive (although it is assumed client would have enough teeth left to answer that one), but if so the life estate is the income interest. If not the trust must have termination language.

Basic point is that knowing why gives you a foundation for what to expect.