Inherited home basis

[cathe]

Mom has passed. Client is selling Mom's home with siblings. Their names were put on the Deed back when Mom was alive. I stated that this causes them to use Mom's basis. There is documentation that states that Mom can do what she wants with the home irregardless of the kids wishes as long as she is alive. Does this statement allow them to use FMV on date of death?

Where in the code can I find backing for the correct position?

Cathe

[ddoshan]

I believe they can. Sure others will correct if wrong. Can't site any code on this. Sounds like a life estate situation. If the home had been sold prior to moms death then mom, and kids would have each had their own basis in the home based on the life estate tables.

[jimmcg]

I believe they can. Sure others will correct if wrong. Can't site any code on this. Sounds like a life estate situation. If the home had been sold prior to moms death then mom, and kids would have each had their own basis in the home based on the life estate tables.

Stepped up basis should apply to remainderman transfer receipt
of life estate. I believe your cite lies in Reg 1.1014-1 uniform basis rules.

[cathe]

Thanks

Thanks to both of you. My client will be quite happy.

Cathe

[mscash]

Inherited Home basis

The question and responses are vague. How were the children added to the deed? If they were added as co-tenants in common or joint tenants their basis is what the value of their interest was then. If mom deeded it to the children and reserved a life estate (to use the jargon) then they get the step up when mom checks out.

[Bees Knees]

They get stepped up basis because Mom's life estate causes her to have to include the FMV of the house on her estate tax return (if she were required to file one).

TTB page 21-34 says:

If the decedent owned the entire property and gifted the remainder interest, the value of the entire property is included on Form 706 and receives stepped-up basis.

Allowing Mom to do what she wants with the property while alive means its her property while she is alive (a life interest) and the kids property when she dies (remainder interest).