Legal Question in Wills and Trusts in California
Trust and Option to Purchse
A friend has a revocable living trust. She would like to sell an option to buy a 50% interest in her house, to be executed at the time of her death.
The option would be to purchase 50% for $600,000 with an option payment of $340,000 . If the option is not exercised the trust will give a non-interest bearing note for the option money, to be paid upon the sale of the house.
The question concerns capital gains tax.
1. Will the trust be liable for a capital gains tax on the option?
2. Does the beneficiary need to sell her half interest in the property to avoid capital gains tax?
3. Could the trust retain it’s half interest and sell at a later date without paying the tax?
1 Answer from Attorneys
Re: Trust and Option to Purchse
this series of questions cannot be answered correctly and completely without a complete review of all facts and consideration of all tax issues - estate, gift, income, capital gain and other issues. you should retain a qualified and experienced cpa or tax attorney.
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