Cost Basis home "purchased" from parent

[Wendy]

Please help. I need other opinions. I don't have a clear head on this since it involves family - and they do not like what I have told them about capital gains.

Parents purchased home in 1974 - father died and mother "sold" the home to three children in the late 90's for "less than $100". She did not retain life estate. Nothing else was done.

Home being sold now for FMV. What would you consider the cost basis for determining capital gains?

Thanks

Wendy

[OldJack]

>>She did not retain life estate. <<

Did mother continue to live in the home? If so, she probably has an unwritten life estate situation.

Selling to family for "less than $100" is probably a gift situation rather than a sale. In such case the tax basis would be what parents purchased in 1974 plus improvements.

[imjulier]

I would just add that if owned jointly, the wife would have gotten a step up in basis on half the house. Then the gifted basis would be higher than if no step up.

My 2 cents.

Julie

[Wendy]

Thank you both. That is what I had told them, but I was beginning to doubt myself. One of the children checked with his "tax guy" who told him, he says, to use the FMV of the home on the date it was deeded over. I told him I strongly disagreed, but of course that was scoffed at. Family!

[imjulier]

Clients make up what they want to hear. If his other CPA will do that, then let them take the tax return there....family or not!