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About John Stancil, CPA
Expertise
I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 30 years. I am a member of the AICPA, National Association of Tax Professionals, and the Institute of Management Accountants. Visit my website at www.johnstancilcpa.com. Also visit my blog, www.thetaxdocspot.com.

Experience
I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CFM, and CIA. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I write a monthly tax column for the local newspaper. I have prepared taxes for over 30 years.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill College

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Tax Law (Questions About Taxes) - Tax on Trust Distribution

Expert: John Stancil, CPA - 11/1/2009

Question
My grandmother transferred property to my sisters and I via an irrevocable trust in 1997. The property is rental and never makes any money therefore my one sister and I are trying to sell our shares to the third sister. Is the basis for the house the original value my grandmother paid if no other gains taxes have been paid since then and how will the distrubution cash be taxed? Will the beneficiaries or the trust be responsible for paying the taxes? Thank you for your help.

Answer
Colleen,

Thanks for your question.

Based on what you have said, the property was a gift to you. Therefore, your basis in the original basis from her. Any proceeds of the sale above your basis would be subject to tax at the capital gain rate.

The trust can pay the tax, or the income can be passed on to the beneficiaries to pay the tax on their 1040. The trust documents may specify which way this is to be done. Otherwise, you may choose.

Hope this helps.

John Stancil, CPA

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