"HW "Skip" Weldon" <skip5700removethis[at]hotmail.com> wrote in message
news:6njdg2dobe05s14oeusetv34hbpj85jp3v[at]4ax.com...
- quote -

Did mom file a gift tax return in 1997 when she gave away the house? If so,
then it is the daughter's house and she is stuck with the gain. If not,
then you might be able to argue that the original transaction was completed
(a bit of a stretch) and undo the deal.

HOWEVER BEWARE - even though mom has other assets, the Medicaid lookback
period has recently increased to 5 years. Mom needs to have enough other
assets to cover the next 60 months or the transfer back to mom and the
subsequent sale could result in her being disallowed benefits.

Additionally, if the transfer back works and mom sells the house, what does
she intend to do with the proceeds? If she is going to gift them to her
daughter then a gift tax return will certainly be required to report that
gift. Mom does have other options though, including the purchase of an
annuity.

An annuity could likely be constructed with an enhanced death benefit that
would allow mom to draw off some monthly income and leave the remainder -
outside the reach of creditors and the probate process, but not outside of
estate taxes - to the daughter.

Good luck,
Gene E. Utterback, EA, RFC, ABA



--
Posted via a free Usenet account from http://www.teranews.com

HW "Skip" Weldon wrote:
- quote -

I would not disagree, and that's without talking about possible gift
tax. How about daughter now moves into house for two years. Then
she'd get the exclusion.


- quote -

This should be a lesson to anyone who want to give their house to their
children rather than leave it as part of a living trust.

Mom got all the emotional satisfaction of giving a house to her
daughter. Presumable the daughter was eternally grateful. That's the
upside.

The daughter should just pay the long term capital gains tax and get on
with her life. If this will kill her, she can sell it for her basis so
there is no gain and no tax. I'm sure any number of investors would
help her out with her emotional problems as long as there is lot's of
equity.

Funny how people hate the "evil rich" until they get a big wad of money
and all of a sudden they want the government to keep their claws off MY
money.

Pay the taxes and enjoy your life.

This should be a lesson to anyone who want to give their house to their
children rather than leave it as part of a living trust.

Mom got all the emotional satisfaction of giving a house to her
daughter. Presumable the daughter was eternally grateful. That's the
upside.

The daughter should just pay the long term capital gains tax and get on
with her life. If this will kill her, she can sell it for her basis so
there is no gain and no tax. I'm sure any number of investors would
help her out with her emotional problems as long as there is lot's of
equity.

Funny how people hate the "evil rich" until they get a big wad of money
and all of a sudden they want the government to keep their claws off MY
money.

Pay the taxes and enjoy your life.

HW "Skip" Weldon wrote:
- quote -

Hi Skip, no I don't disagree. The gifting was a costly mistake.
Joe Weinstein

HW "Skip" Weldon wrote:
- quote -



Are you sure the basis didn't get stepped up when the house was gifted
to Daughter? In that case, Mom owed the tax back in 1997 (unless the
residence exclusion might have applied), and it's too late for the IRS
to try to collect it as long as there was no fraud.

I could be *way* wrong on this...

Bob

Question:
Mom gifts house to daughter in 1997. Mom (now age 87) still lives in
house, but she is ill and a move to nursing home is imminent. Mom has
other assets to pay for long-term care. Daughter wants to sell house.

Daughter has just realized that she has Mom's tax basis. She wants to
give back to Mom so that they can use her residential exclusion
($250,000 tax-free gain for single.)

While Mom has lived in house for requisite period, she has not owned
the house since 1997. Since my understanding is that she must BOTH
own and live in the house for 2 of last 5 years, she does not meet the
test and there is nothing to gain by transferring back to Mom unless
she lives there 2 more years and rules don't change during that
period.

Does anyone disagree?


-HW "Skip" Weldon
Columbia, SC