Is there a stepped up basis?

[momona]

Taxpayer sold his rental property. The original owners were two males and their mother. One male was miraculously taken off the title two years after buying the place with no tax consequence (not my problem). Mother died years later.

My questions are:
1) Does the seller of the property get a stepped up basis from his mother's death? In the back of my tired puny brain, I think there was an exception to inheritance when the property is owned by parent and child.
2) Is the deed a factor ?

[Roland Slugg]

One male was miraculously taken off the title two years after buying the place with no tax consequence.

Miraculously? If he was ever on the deed, I'm sure he was removed from it for a reason known to him, his mother and his brother.

My questions are:
1) Does the seller of the property get a stepped up basis from his mother's death? I think there was an exception to inheritance when the property is owned by parent and child.

I'm not aware of any such exception. The mother's interest would get a stepped up basis as of her DOD.

2) Is the deed a factor ?

What do you mean by this question?

[momona]

What do you mean by this question?

The kind of deed: tenants in common, by the entirety, etc. One is right of survivorship and one is bequeathable. ..if there is such a word.

[momona]

My brain is not as puny and as fried as I think.

•Owning your home with your children: If you intend to avoid probate and for your children to own your real property when you pass, your children should inherit your property through a trust and NOT own it in common with you while you are alive. In our previous example, if instead of having their revocable living trust own the house, Henry and Alice owned their home in common with their son John, John will not be able to use the “step-up in basis” rule and will realize capital gains from the appreciation.