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?

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Definitions:

Portrayed by Society

Describes how societal norms and values influence the representation of individuals, groups, or concepts in various forms of media and discourse.

Sensorimotor

A stage of cognitive development in early childhood characterized by the awareness and coordination of sensory experiences with motor activities.

Cognitive Development

The process by which individuals perceive, think, and gain understanding through interaction and influence of genetic and learned factors.

Jean Piaget

A Swiss psychologist renowned for his pioneering work in developmental psychology, specifically his theory of cognitive development in children.