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?