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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