"Tom Chandel" <tomchandNS[at]gwi.net> wrote:

- quote -

The creation of the joint tenancy in real estate is a
completed gift for federal gift tax purposes. Since the
value of the property was way less than the parents gift tax
exemption, no gift tax would be owing, assuming that they
have not made other taxable gifts during their lifetimes and
used up their exemption.

When father died, the property was back in his estate in
proportion to the amount of consideration he supplied for
the purchase of the property. You don't say whether this is
a separate property or community property state. If it was a
separate property state and daddy provided all of the
consideration for the initial purchase, 100% is back in his
taxable estate and would get a step up in basis to fair
market value as of the date of dad's death. If a community
property state, 50% is back. When Mom subsequently died,
nothing would be in her estate if dad provided all the
consideration; 50% would be in her estate if community
property was used.

So, the answer to your question is that the basis (at least
for federal purposes) is either 100% of the fair market
value of the property at the date of dad's death or 50% step
up at his death and 50% step up at mom's subsequent death.

Jon Gallo

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Tom Chandel <tomchandNS[at]gwi.net> wrote:

- quote -

They might if, as it California, it would allow them to
increase the property tax.

- quote -

Well, it depends. Did the kids pay anything to be put on
title when the parents changed their deed? If not, the were
not owners of the property for tax purposes. The entire
value of the property should be included in the mother's
estate for estate tax purposes (if the estate is large
enough). And the kids' basis is the value on the mother's
date of death.

Stu

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Hi gang!

Hope everyone is having a great tax season, and remember to
write your senators and congressmen thanking them for Tax
Simplification!

I have an issue that appears from time to time in various
forms, and would like to run it by the group here.

We all know that a gift keeps the basis of the donor
(usually), whereas an inheritance usually acquires the FMV
as of the DOD or alternate date.

So, how do we treat property that was transferred to joint
tenancy during the grantor's lifetime?

Facts:
TP's parents transferred parents' house from husband and
wife ownership to "joint tenants and not tenants in common"
with themselves and their children (TP and siblings).
Shortly after this was done the father dies. Mother lives in
the house for about a year or so and goes into a nursing
home and passes away after about 6 months.

The state now looks at the deed to their property. signs off
on the property at that point (I didn't know they did that
kind of thing), and then the kids (TP and siblings) sell the
property (say for 300K). The property in the hands of the
parents had a very low basis (say 50K).

What is the basis and gain to the kids?

Thanks all - and many happy returns!

Tom C.

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