1099s

[spanel]

Mom signs over house to daughter in 1999
Mom paid $12500 for house in 1985
Mom continued to live in house until 2017
Daughter sold house in 2018 for $65000
Mom is still alive and lives in nursing home

I'm trying to figure out a cost basis for the property.

Thanks in advance.

Chris

[Burke]

Daughter's cost basis is Mother's basis (not FMV) in 1999. If it was originally owned by Mother and Father, and he died, 1/2 got stepped up at his DOD. Mother's basis is original cost + any improvements + stepped-up basis if any (see previous sentence). You use Life Estate factors from IRS tables to determine percentage attributable to both. Daughter has capital gain on her portion, Mother can use Section 121 for hers.

[spanel]

I was going that route also... Gift, so daughters basis is mom basis plus capital improvements.

Thanks

Chris

[Lion]

Daughter's basis is mom's basis. IF daughter made any capital improvements after owning house, those add to daughter's basis. Life estate per Burke.

[spanel]

Daughter's cost basis is Mother's basis (not FMV) in 1999. If it was originally owned by Mother and Father, and he died, 1/2 got stepped up at his DOD. Mother's basis is original cost + any improvements + stepped-up basis if any (see previous sentence). You use Life Estate factors from IRS tables to determine percentage attributable to both. Daughter has capital gain on her portion, Mother can use Section 121 for hers.

Why would mom have to do anything? House not in her name? 1099S not in her name?

Chris

[Burke]

Why would mom have to do anything? House not in her name? 1099S not in her name?Chris

Because she continued to live in the home, so it is considered a Life Estate situation as it is not a completed gift under the law. You calculate as I described in answer above. It is to daughter's advantage tax-wise since part of the gain will be attributable to Mom and Mom can use her Section 121 exemption for that part. If Mom is on Medicaid for the nursing home however, it may affect that. If daughter had sold after Mom's death, property would have gotten stepped-up basis.