Discussion:1014(c)(1) applies to spouses conversion of SP to CP???

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Discussion Forum Index --> Advanced Tax Questions --> 1014(c)(1) applies to spouses conversion of SP to CP???
Discussion Forum Index --> Tax Questions --> 1014(c)(1) applies to spouses conversion of SP to CP???

Amichnicka (talk|edits) said:

18 December 2008

I have a client who wants to convert her separate property to community property.

1014(c)(1) says that if a person gifts appreciated property to a decedent within one year of the decedent's death and acquires it back from the decedent's estate, there is no step up in basis.

Does this rule apply to transfers of separate property to a spouse?

Thanks in advance.

Jctmstx (talk\|edits) said:	18 December 2008
I think you were reading under 1014(d)(1)which applies to Disk stock!

Amichnicka (talk\|edits) said:	18 December 2008
It's actually 1014(e)(1). I would like to get input on whether it applies to transfers between spouses.

Riley2 (talk\|edits) said:	19 December 2008
A conversion of SP into CP is a gift. Yes, 1014(e)(1) would apply.

Amichnicka (talk|edits) said:

13 January 2009

Apparently, there is Private Letter Ruling that says 1014(e) does not deny a step up if the property is transferred to the decedent spouse via lifetime QTIP and upon the spouse's death the assets in the QTIP go into a Credit Shelter trust from which the trustee, in the trustee's discretion, may make distributions to the surviving spouse and children. So long as the distributions to the surviving spouse are not required distributions of income, the property gets a step up in basis.

Anyone know this PLR or a free source other than Tax Almanac where I can search for it?

Thanks!