oenmoe[at]earthlink.net (T Bown) wrote:

- quote -

There's something wrong with the question. If wife only
owned a life estate, then she couldn't sell the house.
(Can't sell what you don't own!) Since you're question is
pretty detailed as to Dad's transfer to wife and then
remaindermen, and then you say "in *2003* wife sells house .
.. .", I suspect this 'sale' may not have happened yet, and
you're looking into the future tax implications. The title
company will catch on that wife doesn't own the house, and
the transaction won't be completed.

If on the other hand the sale of the real property (and not
wife's life estate) went through, then you *must* be
incorrect about Dad's transfer of the property upon his
death, unless the title company screwed up.

Rick Bryan
New York, NY

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

T Bown wrote:

- quote -

How can the wife sell the remainder interest that she does
not own?

--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247 EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Dave Woods, EA" <d.woods[at]verizon.net> wrote:
- quote -

I also wonder how the owner of a life estate could deliver a
clear title to the purchaser. Suspect that there is some
confusion about "life estate" on part of poster, and suggest
a quick review of exactly what Dad's will provided.

-HW "Skip" Weldon
Columbia, SC

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

T Bown wrote:

- quote -

None. The wife OWNED the house and she gets the proceeds.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

T Bown wrote:

- quote -

I suspect remaindermen might not be the correct term here.

I know you can sell or donate a life estate, but not the
underlying property. My recollection on this is of a woman
who donated her life estate to a church which used it as a
parsonage. The heirs went ballistic. But she owned the use
of the property during her natural life and, in the absence
of a covenant to the contrary, she had the right to let the
church use it too.

It also remind me of the case of Terry Moore, the actress
and one-time girl friend of Howard Hughes, who at the age
of 60+ fell in love with a plumber's apprentice who was in
his eary 20's. Her family, in fear of her squandering her
wealth, tried to have her declared incompetent to handle
her financial affairs. The judge simply said it was hers
to with as she chose.

In the case presented by the original poster, the wife
appears to have given up her life estate for whatever reason
or incentive. Hopefully there was an appraisal in 1960
because that is the basis for their long-term capital gains.

Dick

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

"T Bown" <toenmoe[at]earthlink.net> wrote:

- quote -

First of all, I am not sure how the wife could have had the
power to sell the home if it was a life estate. As to your
other questions, basis is date of death value in 1960 times
remainder share, and any gain of course is a long term
capital gain.

--
David M. Woods, EA
Boston, MA 02109

Postings here are general information only and not to be
relied upon as advice.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Dad dies in 1960. Leaves house to wife as life estate and
designates his children (her step children) as remaindermen.
In 2003, wife sells house. What is nature of the share of
escrow proceeds distributed to the chlidren (capital gains,
ordinary income? What is the basis? And if it is a capital
gain, is it long or short term?

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->