Sale of home that parent lived

[TaxGuyBill]

Thank you NYEA. I stand corrected about my thought it would not qualify for an Implied Life Estate.

[TAXNJ]

I think you might be thinking about the concept of "equitable ownership" where the taxpayer must assume the benefits and burdens of ownership.

IRC 2036 discusses the inclusion of the life estate in the gross estate. Benefits and burdens are not required. Possession and enjoyment are more suitable terms

The value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money's worth), by trust or otherwise, under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death -

(1) the possession or enjoyment of, or the right to the income from, the property, or

(2) the right, either alone or in conjunction with any person, to designate the persons who shall possess or enjoy the property or the income therefrom.

Did you see BURKE's reply post?

I am of the opinion (and it has been held up in court) that this is a Life Estate situation since parents continued to live in the house as their personal residence. It may not have to be written as such; it can be implied and it has been discussed at length on this board in the past. As such, and due to the fact that they sold the home AFTER both parents died, it gets stepped-up basis and should not have much of a gain, if any, as long as it was sold shortly after death of the last parent. See IRC 20.2036-1(a) entire section.