Basis of Property received as a gift

[mightmen16]

Client's parents put their children on the deed of their property. Parents have rights to live there until death.
Children have spent alot on remodeling house. They sold the house at a gain. I know we are using the parent's adjusted basis in the house to calculate the tax. Can basis be increased by the remodeling expenses? Gift tax has not been paid and is there an amount of the total estate that they can be exempted from filing a gift tax return?

[Burke]

Assuming the parents have not died, you have a life estate situation whereby gain will be attributed both to the parents and the children based on IRC 7520 life estate factors based on age. Parents may be able to elect 121 to avoid taxable gain. Children will not. Need to review Life Estate rules.

[TAXNJ]

Client's parents put their children on the deed of their property. Parents have rights to live there until death.
...... They sold the house at a gain......

You said "Parents have rights to live there until death." Parents still live in the house or decided to move?

[Burke]

Well, OP said house was sold, so I don't think they could still live there. OP said nothing about parents' death. Generally, basis is calculated as it always is: i.e, original cost, + improvements -
expenses of sale = [gain/loss]. Then you go from there about dividing it up if you have a gain.

[mightmen16]

You said "Parents have rights to live there until death." Parents still live in the house or decided to move?

Father is deceased, mother is now in nursing home. Mother's name was not on the deed.

[Burke]

You said "parents have the right to live there until their death." That had to be established on a deed (generally) at the time the childrens' name were added to it. Was the mother one of the original owners? Did the father die before or after this was transferred to the children? Even if a life estate was not specifically established in writing in the new deed, it is implied by the fact she (or them) continued to live in the home. She still had that right when the home was sold. So it is a split calculation.