Hello,

For Income tax purposes, this trust is a grantor trust under provisions of Section 677(a) of the Code. it was created in Nov 2007 and it has finally sold its only asset, a house, in 2012.

We are preparing the 1041 form for the final year and wanted to know how should I calculate the cost. Would step-up or carryover basis apply, and when? do we use the cost of the house at the time it was given to the trust? the original price? or maybe the date of death when the last trustor died?

Also, after the house was sold, the trustee distributed the proceeds of the sale of the house to the beneficiaries. Do we need to give them any kind of paperwork? Assuming there was no gain on the house, would they receive a K-1 form after we file the 1041 for the distributions of sale of the house?

What if there was a loss?

Thanks,

J