How is this Capital Loss in Bypass Trust applied?

[boostm3]

What is the name of your state (only U.S. law)? Ct.

As trustee of my deceased father's Trust, I recently sold the house which was located in the logical unit known as Family Trust B within his trust.. There is also a Marital share A in his Trust which gets combined with the assets of his surviving spouse upon her passing, and the combined total is subject to her estate tax exclusion in effect at the time of her passing, with any overage being taxed at the prevailing rate, before being passed onto her heirs, of which I am one.

This question pertains to my father's Trust, and the large capital loss I took upon selling the house in the Trust's B share. My question is, since both the A share and the B share have the same tax id, ie, the tax id is assigned to the Trust as a whole, is the capital loss from the house sale distributed across the entire trust, and therefore, available to offset gains or income in either share? Or, is the loss only usable by assets and income in the B share?

 

[LdiJ]

What is the name of your state (only U.S. law)? Ct.

As trustee of my deceased father's Trust, I recently sold the house which was located in the logical unit known as Family Trust B within his trust.. There is also a Marital share A in his Trust which gets combined with the assets of his surviving spouse upon her passing, and the combined total is subject to her estate tax exclusion in effect at the time of her passing, with any overage being taxed at the prevailing rate, before being passed onto her heirs, of which I am one.

This question pertains to my father's Trust, and the large capital loss I took upon selling the house in the Trust's B share. My question is, since both the A share and the B share have the same tax id, ie, the tax id is assigned to the Trust as a whole, is the capital loss from the house sale distributed across the entire trust, and therefore, available to offset gains or income in either share? Or, is the loss only usable by assets and income in the B share?

Without being able to examine the trust, the best I can tell you is maybe. You really need a sit down consult with a tax professional that specializes in trusts. This is definitely not something that you should remotely consider tackling on your own.

The best I can tell you is that IF it was an irrevocable trust (or is now an irrevocable trust) and IF the trust has historically paid its own taxes (the income/loss did not pass through to the beneficiaries or the grantor or will not in the future), or will pay its own taxes in the future, that any income loss of the trust should belong to the trust as a whole.

Which is a lot of "ifs"...which is why a tax professional needs to review the trust.

 

[TrustUser]

if we are talking what occurs generally - there is no family trust B until your dad dies. once he died, that portion of the trust would have become irrevocable, and there should be a separate tax id for it.

a separate tax return is done for it each year, with the income being reported on your mom's individual return (assuming that trust b distributes to your mom).