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Posted by Shyster1040 on December 28, 2006, 9:13 pm
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This is neither a bona fide sale nor an inheritance (i.e., a
testamentary transfer) - assuming that Parent lived a while
longer after having transferred the house to Son.
What this really looks like (and what it is) is a gift to
Son by Parent on the date of the transfer in 1990, in an
amount equal to the then FMV of the house, less $1. That
means that a gift tax return should have been filed; if not,
you've got potential gift tax liability sitting out there.
As to basis, because this is in substance a gift, Son would
have taken a transferred basis in the house equal to
Parent's basis in the house at the time of the transfer in
1990, increased by $1 to reflect Son's investment of $1 in
the house. As such, the FMV of the house either on the date
of transfer in 1990, or on the date of Parent's death
(presumably at a later date) is irrelevant to the issue of
Son's basis.
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Posted by Seth Breidbart on December 29, 2006, 8:07 am
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> As to basis, because this is in substance a gift, Son would
> have taken a transferred basis in the house equal to
> Parent's basis in the house at the time of the transfer in
> 1990, increased by $1 to reflect Son's investment of $1 in
> the house.
I don't think so; I think it's the greater of parent's basis
or $1.
Consider a $300,000 house (parent's basis $200,000) sold as
a gift to the child for $150,000. The child wouldn't get a
basis of $350,000.
Seth
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Posted by HW \"Skip\" Weldon on December 29, 2006, 8:52 pm
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> What this really looks like (and what it is) is a gift to
> Son by Parent on the date of the transfer in 1990, in an
> amount equal to the then FMV of the house, less $1. That
> means that a gift tax return should have been filed; if not,
> you've got potential gift tax liability sitting out there.
Raises an interesting question. Party with the gift tax
liability is the parents. What if they did not file gift
return, are deceased and their estates closed?
Also, I assume that if son had qualified the property as his
principal residence he would get the appropriate residential
exclusion upon sale.
-HW "Skip" Weldon
Columbia, SC
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2006) - All rights reserved. >>
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Posted by Stuart A. Bronstein on December 30, 2006, 2:48 pm
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>> What this really looks like (and what it is) is a gift to
>> Son by Parent on the date of the transfer in 1990, in an
>> amount equal to the then FMV of the house, less $1. That
>> means that a gift tax return should have been filed; if not,
>> you've got potential gift tax liability sitting out there.
> Raises an interesting question. Party with the gift tax
> liability is the parents. What if they did not file gift
> return, are deceased and their estates closed?
The IRS can get it from the recipient.
> Also, I assume that if son had qualified the property as his
> principal residence he would get the appropriate residential
> exclusion upon sale.
If he lived there for two years out of the five before sale,
I agree with you.
Stu
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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Posted by Stuart A. Bronstein on December 28, 2006, 9:13 pm
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> Parent transfered house to son for $1 in 1990. Son sold in
> 2006. Would the house basis be the FMV on the date he bought
> or really looks like inherited?
His basis would be whatever the parent's basis was.
Stu
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
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<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2006) - All rights reserved. >>
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