1014 Basis Adjustments and Irrevocable Grantor Trusts
By Mark A. McMillan on Aprl 3, 2023
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Mark A. McMillan
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The IRS issued Revenue Ruling 2023-02 on April 17, 2023, concluding that the basis adjustment incident to a person’s death, under Section 1014 of the Code, generally does not apply to the assets of a grantor trust unless the assets are included in the grantor’s gross taxable estate.
Generally, Section 1014(a) of the Code provides that “the basis of property in the hands of a person acquiring the property from a decedent . . . is the fair market value of the property at the date of the decedent’s death.” The Revenue Ruling states that in order for property to be acquired from a decedent, it must fall under one of the seven types of property outlined in Section 1014(b).
According to the Revenue Ruling, assets owned by a grantor trust, which are not included the grantor’s gross taxable estate, do not fall in the seven types of property; therefore, the assets do not receive a basis adjustment.
If you have any questions regarding basis adjustments, grantor trusts or any other tax related topic, please contact me at 214-744-3700 or mmcmillan@meadowscollier.com.
Generally, Section 1014(a) of the Code provides that “the basis of property in the hands of a person acquiring the property from a decedent . . . is the fair market value of the property at the date of the decedent’s death.” The Revenue Ruling states that in order for property to be acquired from a decedent, it must fall under one of the seven types of property outlined in Section 1014(b).
According to the Revenue Ruling, assets owned by a grantor trust, which are not included the grantor’s gross taxable estate, do not fall in the seven types of property; therefore, the assets do not receive a basis adjustment.
If you have any questions regarding basis adjustments, grantor trusts or any other tax related topic, please contact me at 214-744-3700 or mmcmillan@meadowscollier.com.
