Value of a Gift

[Christian]

A daughter was given a lot which had an appraised value of $33,600 in 2012 by her mother who had inherited it from her husband some years before. She sold the lot for $16,000 in 2017. I am thinking the daughter has no basis (her basis is zero) in the lot and she owes capital gains tax on the sale. However, she may be able to claim the lot's value when inherited by her mother and that is my question. Any input will be appreciated.  

 

 

[Gail in Virginia]

Was a gift tax return filed in 2012?  It should have been, and the basis should have been established at that time as the basis the mother had in the lot, assuming that it was less than the FMV in 2012.  If so, the lesser of the mother's basis on the gift tax return or the FMV on the gift tax return should be the daughter's basis upon sale.  Perhaps that is why the appraisal was done.

[rfassett]

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And it could be a split basis with mother's original basis and step up on half the basis when inherited.  As Gail states, that should have been established on the gift tax return.  If not, some investigation will need to be done.  At any rate, the daughter's basis is most likely north of zero.

[Christian]

As it happens the mother bought the property some 25 years ago and only the Lord knows what she paid as she is now deceased. So I will need to come up with some reasonable valuation  and that will be the daughter's basis. There was no gift tax done. Folks in this neck of the woods do this all the time and when property is sold they have no clue what it was worth. I have not done one of these in a long time and ,of cuss, I have INADVERTENTLY  misplaced my notes from the last time around. The $33,600 value was the county value for property tax in 2012 and not a professional appraisal as I was led to believe. So I will go with the value I can establish her mother paid for the land 25 years back. What do y'all think?

[WITAXLADY]

and 1/2 of the stepped up value of the dad...

what does the property taxes say - good indicator - when dad passed away..

[WITAXLADY]

sorry - re read post - inherited from dad - would be full value at his passing - use property value - ask a realtor  for help at that time - I have had some helpful business people in situations, get some comparable land parcels..

[Lee B]

I don' know about your county, but my county assessor would have a readily available record of the purchase, even 25 years ago.

[DANRVAN]

28 minutes ago, cbslee said:

I don' know about your county, but my county assessor would have a readily available record of the purchase, even 25 years ago.

I agree.

[michaelmars]

so if mom bought it how did she inherit it from her husband a few years ago.  This isn't the whole story.  Client probably doesn't even know the whole story.  After all my kids don't know how me and my wife juggle assets.