"Gil Faver" <rowdy'sboss[at]xxyz.com> wrote:
- quote -

Generally a deed has to be both made AND delivered (or
recorded) to be effective. If neither of those things
happened, then in theory it may be possible to go into court
(or have the kids re-convey the property) and have the deed
un-done.

Stu

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"Stuart A. Bronstein" <spamtrap[at]sbcglobal.net> wrote:
- quote -

This was not a mere promise to make a gift, a deed was
executed. The gift was made.

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- quote -

If she on Medicaid she would have had to prove that she has
assets of less than 2,000 as I recall.

If she receives any money or assets, it could affect her
Medicaid status which may be worth thousands per month
depending on here state of domicile and the amount of her
social security check.

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Stuart A. Bronstein wrote:
- quote -

Although I was jousting (or jesting if you will), there
actually is such an operation possible, not that anybody in
western society actually cares if a girl's still a virgin
before marriage any longer. But they used to care. In some
parts of the world they still do.

Thus it would be deductible, yes.

ChEAr$,
Harlan

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Shyster1040 wrote:

- quote -

(snipped.....)

Shyster, thanks so much for that beautiful new word. At
first I thought.... oh nevermind.

Really, it's a good word.

ChEAr$,
Harlan Lunsford, EA n LA

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"Shyster1040" <Shyster1040[at]nospamhotmail.com> wrote:

- quote -

Yes, I think you're right about that. Depending on the
state, the gross value of the property may be included in
the probate estate for calculation of probate expenses, if
based on value.

- quote -

As someone here continually pointed out to me and I finally
verified, a fairly recent change in the law turns the
three-year rule from something that was universally applied
to something that will bring few gifts back into the estate.

Stu

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Harlan Lunsford <hnslunsford[at]bellsouth.net> wrote:
- quote -

The IRS investigates girls' virginity? I wonder if that
operation is deductible.

Stu

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Harlan Lunsford <hnslunsford[at]bellsouth.net> wrote:
- quote -

I don't about the rest of you, but I am still a virgin in
at least 25 states and in most foreign counties plus every
morning when I awake.

Dick

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Gil Faver wrote:
- quote -

(snipped
- quote -

Sort of like restoring a girl's virginity, don't you think?

ChEAr$,
Harlan Lunsford, EA n LA

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"Gil Faver" <rowdy'sboss[at]xxyz.com> wrote:
- quote -

A promise to make a gift, at any rate, is not a legally
enforceable promise. So there may be a legal basis to argue
that you can undo a gift and act like it never happened, if
all the parties agree.

Stu

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paulthomascpapc[at]bellsouth.net wrote:
- quote -

As Paul described, the value of the house will be included
in Mother's estate for federal estate tax purposes when she
passes because of the retained life estate. As a
consequence, the three children will take a basis in the
house equal to its fair market value, generally on the date
of her death (there are certain valuation alternatives, but
I've stated the general rule). The only big exception to
this is if she happens to pass in 2009, in which case the
children will not get an automatic basis-step up; instead,
her executor will have a certain amount of value (I can't
remember the number right now, but I believe that it is at
least $1M, if not more) that s/he can allocate among the
assets included in the estate to increase their basis (but
not over date of death FMV) - for most estates, this will in
practice have the same effect as the current automatic
step-up rules.

If Mother's condition is truly parlous, and if death is a
likelihood in the near-term future, you might also consider
borrowing against the value of the house and using the
proceeds to pay for her care. After Mother passes, the
house can be sold to pay off the loan if that is what the
children really desire.

By doing this, Mother and the three children will incur
interest expense on the loan; however, by waiting until
after Mother's death, the children will have a stepped-up
basis and there will be little or no gain on the sale -
depending on the anticipated time until Mother is likely to
die, the tax savings are likely to offset the interest
expense.

Also, I believe (without looking it up, so hopefully someone
else will double-check and correct me if I'm wrong), the
loan on the house will have the effect of reducing the value
included in her estate, although any loan proceeds that are
still held by Mother when she passes will offset that
decrease - in other words, any proceeds spent to cover
Mother's expenses will reduce the size of her estate for
estate tax purposes; needless to say, any proceeds used to
make gifts will most likely be pulled back into the estate
(I'm assuming that she is likely to die within the next
three years), so using the proceeds to that end is unlikely
to have the desired effect.

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"Arthur Kamlet" <kamlet[at]panix.com> wrote:
- quote -

how do you "undo" something that was done? If a gift was
made, a gift was made.

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Paul Thomas, CPA <paulthomascpapc[at]bellsouth.net> wrote:
- quote -

All this gifting by mom to kids; gifting back to mom from
kids; it's making my head spin. Worse than watching a
tennis match.

If you arer serious that each trasnaction is a gift, each
transaction would require a gift tax return to be filed.

Just undo the original gift, - I assume kids never paid
property tax or mortgage interest, have mom sell her own
house (use POA for that), exclude the gain under Sec 121,
and be done with it.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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"retired" <rhubbar164[at]earthlink.net> wrote:

- quote -

don't forget that the mother still has a life estate, and is
entitled to the income from the property or the proceeds.
Don't be spending that money yet.

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retired wrote:

- quote -

The proper way to have transfered the home to the children
was to place it in a trust, giving the mother the right to
live there until her passing, at which point the house gets
a stepped up basis, no gains taxed. (up to the current
estate tax limits).

For the above, I must say, the value back then was likely
trivial. My childhood home was bought in that time give or
take one year. It was a four family house, and was bought
for $4000, now worth about $800,000. If you have no records
at all of cost of the land or cost of improvements, I'd go
to the town hall and look up property records for sales back
then.

Yes, they each pay the tax for their share of the sale.

JOE

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"retired" <rhubbar164[at]earthlink.net> wrote

- quote -

It sounds like a gift, so original cost basis transfers to
the children. And yes, the gain would be taxable to each
child according to their share ownership. The closing
attorney can split up the 1099 reporting accordingly.

Had she passed away, the "full lifetime rights to the
property", or life estate, would have kept it in her estate
and then subject to a step-up in basis. That doesn't seem
to be the case.

Consider gifting it back to mom and have her sell it with a
$250,000 gain exclusion. Most likely someone will have to
obtain a POA to transact the sale and other related
business.

1942 eh? You could get an appraisal for what the property
should have cost back then. But consider hiring a title
search company to run down the numbers (probably quite
economical), or go to the county courthouse attic (or
basement) and deal with the mold and dust to research the
records yourself. Chances are you can find it in a
jiffy......that is, if "a jiffy" is the same as a "country
mile". Who knows, maybe the county clerks aren't swamped
when you go in and you can get them to help.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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SITUATION: My wife has full financial "power of attorney"
over her Mother's financial affairs. The Mother is now
basically totally incapacitated, is in a nursing home and
is on Medicaid.

About three years ago, my wife's Mother changed the deed on
her property from her being the sole owner of the property to
her three children (my wife, a brother and a sister) being
equal owners, with the Mother having full lifetime rights to
the property. At that time, the Mother was fully capable of
making this decision on her own and did so.

Because of the Mother's current condition (with no prospect
of improvement), the three children have decided to sell the
property which is now in their names. Upkeep, taxes,
utilities, etc. are current expenses that must be paid for
this property.

The property includes about 1-1/3 acres of land, on which is
the Mother's home (until she had to be admitted to a nursing
home.) This home was built in 1942 by the Mother's husband
himself. Nothing can be found among the Mother's personal
records as to the original cost of the home.

The questions now are:

What would be the tax basis of this property for capital
gains tax reporting purposes if the property is sold?

As the three children would share equally in any gains
obtained, each would only report one third of the total
gain, correct?

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