Another 1031 Question
I am trustee of an irrevocable trust. It holds a rental property purchased using 100% of the sale of a previous property. It was a 1031 transfer.
The basis value of the first property is 8% of the current value of the 'new' property. (I'm using raw numbers, not deducting sales costs, atty fees, depreciations, etc.)
The property can be appointed to our DS or DGS (or anyone I choose), or they will inherit it within the trust.
How does the IRS look at this situation? Does the property change in status? Will DS owe capital gains on 92% of the sale if title changes to his name -- even if he doesn't sell it? Can he continue to sell and buy using 1031 protection?