To avoid probate, a mother listed her adult son and two daughters along with herself as owners of her condo. The mother purchased the property and the son and two daughters had no cost into it. The mother died and the son and daughters sold the property and split the money equally three ways. Do the son and daughters have any cost basis in the property to report on Sch. D?
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TTB, page 21-28, "Unless the surviving joint tenants can prove they provided consideration for their shares, the entire value of property held in joint tenancy is included on Form 706 and receives stepped-up basis."
The negative side of that rule is, if Mom's gross estate exceeded her exclusion amount, the entire value of the condo would have to be reported on the 706.
The positive side is the kids get stepped-up basis to FMV at the time Mom died. -
I agree with Bees. Children get a stepup in basis to fair market value at date of death and each report their share of the sale on 1040 Sch-D with zero or near zero gain if sold within a few months of death.Comment
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