Sukdev Basi Funded an Irrevocable Simple Trust in May 2008

question 42

Essay

Sukdev Basi funded an irrevocable simple trust in May 2008. The trust benefits Sukdev's son for life and grandson upon the son's death. One of the assets he transferred to the trust was Jetco stock, which had an FMV on the transfer date of $40,000. Sukdev's basis in the stock was $44,000, and he paid no gift tax on the transfer. The stock's value has dropped to $33,000, and the trustee thinks that now, October 2011, might be the time to sell the stock and take the loss deduction. For 2011, the trust will have $20,000 of income exclusive of any gain or loss. Sukdev's taxable income is approximately $15,000. What tax and nontax issues should the trustee consider concerning the possible sale of the stock?

---

Definitions:

Connectionist Model

A computational model of cognitive processes, based on the concept that mental phenomena can be described by interconnected networks of simple units.

Memory Model

A theoretical framework describing how memory processes information, including encoding, storage, and retrieval.

Specific Pattern

A distinct arrangement or sequence of elements that is recognizable and differentiates it from other arrangements or sequences.

Misinformation Effect

A phenomenon where a person's recall of episodic memories becomes less accurate due to post-event information.