What carry value is
Carry value is the value at which the accounting carries an asset. The property on hand at the beginning of the period (Schedule A) and at the end (Schedule H) are both stated at carry value (Prob. Code §1061(a)(1), (a)(10)). It is not market value: an asset that rises or falls in price stays at the same carry value until something actually happens to it, such as a sale.
Where the first carry value comes from
In a first account, carry value starts from the value at which the fiduciary took the property: for a decedent’s estate, the inventory and appraisal; for a trust that became irrevocable at a death, commonly the date-of-death value, which is also the “stepped-up” tax basis the trust’s CPA will use. Purchases during the period are added at cost. In every later account, carry value continues from the prior account’s Schedule H.
How it changes
- Sales: the carry value of the shares sold leaves the accounting; the difference between it and the proceeds is the gain or loss (§1062(d)).
- Purchases and reinvestments: new lots at cost, shown as changes in form (§1063(b)).
- Splits, spin-offs and returns of capital: the carry value is reallocated or reduced, without any cash changing hands.
Carry value vs. book value
In business accounting, “carrying value” or “book value” usually means cost less depreciation. In a California fiduciary accounting, carry value means something narrower: the value at which the fiduciary carries the asset on the accounting, set when the fiduciary takes it and changed only by events like a sale or a corporate action.
Does a trust get a step-up in basis?
For income tax purposes, property included in a decedent’s estate generally takes a basis equal to its value at the date of death, which is why the assets of a revocable trust usually get a “step-up” when the settlor dies. Property of an irrevocable trust that is not included in the estate generally does not. That tax basis is often, but not always, the same figure as the first carry value; the trust’s CPA should confirm it.
Market value goes on its own schedule
The accounting also reports market value, on separate schedules at the end of the period and, after the first account, at the beginning (§1063(a)). Putting market value on Schedule H instead of carry value is one of the most common reasons an accounting will not balance; see the usual causes.
Gain or loss on a sale
Let Balanced follow the lots
Balanced is a new kind of software for California fiduciary accountings. From the PDF bank and brokerage statements, Balanced generates the accounting in minutes to hours, rather than the days, weeks or months of manual work it otherwise takes: transactions classified to their schedules, carry values tracked lot by lot, first-in, first-out, through purchases, sales and corporate actions, each account reconciled to its own statements, the summary balanced to the penny, and each entry cited to the statement and page from which it was drawn, delivered as one fully editable Excel workbook. $699 per accounting.