Do you know how to determine the tax cost bases of the trust’s assets?

Answer

Basis calculation depends on how the assets were acquired. Any assets that the grantor purchased during his or her lifetime retain their original tax cost. However, after the grantor’s death, the tax cost bases changes to the market values of the assets on the grantor’s date of death. The trustee must take the tax cost into consideration in deciding which assets should be sold and the timing of the sale. If the trustee does not know the basis information, unexpected income tax can become due.