I have a question on the appropriate cost basis on a house. If a house cost basis was $100K and then it was put into a living trust. One spouse passes away, the trust splits into two, marital and family. The appraisal on the house is $500K, which is the new cost basis. When the second spouse passes away and the house value drops to $300K. What is the cost basis for each for the trusts, family and marital? Is it the original $500K or it goes down to $300K or one trust is the old value and the other at the new value? The beneficiaries are the same in both trusts. If the house is sold at $400K would there be a taxable gain or loss in either trust?
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