My grandparents set up an irrevocable trust account that has a few stocks in it. Now those shares are being transferred to me from the trust.

Since those shares have value at some point, Uncle Sam is going to want his share of the taxes. My guess is either the shares now have a cost basis of $0 for me, OR I owe tax on the current value of the shares OR the trust is some weird special thing that gets you out of this problem.

When I sell those shares, what will the cost basis be?

2 Answers 2


It may depend on a couple of things: (a) whether the grantors (your grandparents) died or not, and (b) when. There were some rules that applied only in 2010 that may affect step-up in basis for grantors to irrevocable trusts that died in 2010.

But I wouldn't think the basis would be zero in either case. The stocks cost something at some point, and if anything, the stocks' basis would be at the very least the lower of the market price at the time of purchase or the time of transfer (step-down in basis).


In general, a revocable trust will get a stepped up basis when the person dies. For tax purposes, the trust is transparent in that the taxes are paid each year by the owner and it's only after death it's out of their control.

An irrevocable trust is a different situation. Often, it's used to take advantage of an annual gift limit, currently, $13,000 per giver/recipient combination. The assets of the trust are no longer the property of the giver and they take on the cost basis as of the day of transfer. The trust is a separate legal entity and has to file a return if it has income. The trustee should be able to tell you the cost basis of the shares you are receiving.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .