capital gain treatment on the sale of inherited property via generalu skipping trust

[toofan1]

How the property sold by second generation(grandchild) treated in a generational skipping trust when she /He sells the property? Capital gain should be paid by the grandchild???If so, what would be the basis of the property inherited?

[M-MTax · Accepted solution]

Grandchild takes trust's basis.....trustee should know this.....and pays capital gains tax if the property is distributed in kind from the trust. 

[toofan1]

 Thank you for your response. The trust was signed in 2007. The property was in trust for 23 years. The trustee sold the property in 2023. She was 1/4 owner of this property via generation Skipping trust. So she should report the gain ( difference of the  market value of the property a t the time on the transfer of ownership and the selling price) as the capital gain. Right?

[M-MTax]

Did the trust sell the property or did the trustee transfer the property to her and then she sold it? If the trust sold the property then she should get a K-1 from the trustee. If the she sold the property after it was transferred to her then she has gain based on the difference between the selling price and her basis.....she takes the trust's basis no matter how long the property has been held in the trust.