Ask Terry Questions Taxable event

Taxable event

By Terry Savage on May 08, 2022 | Taxes & Economy

If the Grantor of a revocable trust transfers stock out of the Trust brokerage account (which uses the Trust tax id#) to another brokerage account in his name (that uses his ss#), is that a taxable event requiring tax to be paid on any gain?
In the past, the Grantor has included all the Trust brokerage account income in his tax return since the inception of the Trust but has never done a transfer out of the Trust to himself.
Thank you.

Terry Says

Yes. The sale of stock (whether inside the RLT or outside) triggers a gain. Every RLT I have seen uses the grantor’s tax id (ss#). I can’t imagine why the tax ID would be different.
But assuming that stock is transferred out as a gift, it carries the same cost basis as the grantor had. And that requires taxes be paid on the gains — likely at the long-term capital gains tax rate.

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