The booby prize when property held in trust is included in a decedent's taxable estate is that the property receives a fresh income tax basis. So, there's estate tax on the property because it's in the estate. But at least the fresh basis wipes out all the income taxes on the property's appreciation during the decedent's lifetime. Unfortunately, there's no fresh basis for the taxable income that the decedent had coming during his lifetime — but didn't receive before dying (called income in ...

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