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Tax Law (Questions About Taxes)/capital gains tax on a credit shelter trust


Thank you for considering my question.  
My father died 15 years ago. he had set up two trusts: one a survivors trust for my mom and a credit shelter tax trust called a family trust. My mother died last month. My question is in regard to the family trust.  The amount in the trust is almost exactly the same as when it was set up at my father's death 15 years ago. dividends and other increases were moved to my mom's trust. there are some stocks with capital gains and we are told we need to pay taxes on those capital gains.  However, there were some losses at the beginning of the 15 years that are almost the same as the gains.  Can those losses be used to offset the capital gain taxes now?  What about the fees charged during the 15 years by the bank? Apparently those were never used on my mom's taxes.


Thanks for your question.

A tax return should have been filed each year for the trust, with losses taken in the year incurred. If the losses were of such a nature that they could be carried forward, they would be applied to any gains on a year-to-year basis. However, you cannot take the losses from one trust and apply it to the gains in another trust unless the first trust is a beneficiary of the second trust and the losses passed on to the second trust via a K-1 issued annually with the trust income tax return.  The same goes for the fees, they should have been deducted each year, and you cannot accumulate them and deduct them all at once.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA


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 am Professor Emeritus at Florida Southern 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 CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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