mac <jj120e[at]nospam.net> wrote:

- quote -

If that's what the probate court orders - it's generally up
to the personal representative to make that decision. If
all the heirs agree on something else, the court may well go
along.

- quote -

Technically the probate estate is a tax paying entity until
it is closed. On the other hand if it has no assets it's
probably not receiving taxable income.

- quote -

Income tax basis, yes. And and the valuation for
determining the size of her taxable estate for estate tax
purposes.

- quote -

Probably. Sometimes it is proper to pass the tax liability
on to the beneficiaries rather than have the estate pay it.
For example if the beneficiaries are in a lower tax bracket,
or if they live in the property for two years before the
place is sold, the total income taxes may be less to have
them taxed than the estate itself.

Stu

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Stuart A. Bronstein wrote:
- quote -

So then as I understand it......the estate property would be
sold as reqired by her will, taxes would be paid by the
estate only on any income and capital gain for the period
of time between the her death and distribution of balance of
funds to the beneficiaries of the will. Also the estate tax
basis would be whatever the value of the property was on the
date of her death not the date the the she inherited it
herself. And after distribution of funds to beneficiaries
they would not be liable for any federal income taxes?. Mac

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"Ivan Erwin" <ierwin[at]hotmail.com> wrote:

- quote -

Right. However they are taxed on income (e.g. interest,
dividends) that is generated from the inheritance to the
extent that the estate does not recognize and pay tax.

- quote -

Assuming she has no other substantial assets, that's
correct.

- quote -

Actually an accountant would be better than a lawyer for
doing the taxes, either income or estate.

- quote -

Unless the particular state has enacted an inheritance tax.
This was fairly common at one time, but these days, due to
the structure of the federal estate tax, it's not.

Stu

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Not sure why the experts didn't get more specific since you
obviously don't understand much of this. I'm an avid reader
of this group but not otherwise I'm not any tax expert.

1) The recipients of inheritances are not taxed. Do not
report the inheritance. (Keep records in case the source of
the money is ever questioned. It wasn't from selling drugs,
or unreported wages, etc.)

2) The amount of the estate is way, way too low to be
taxable.

3) If it was taxable, the executor would hire a lawyer to
handle the many, many details. The estate would pay the
taxes.

The money going to the heirs (nieces and nephews) after
payment of the taxes and expenses would not be taxable to
the heirs.

Ivan

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"Bill Brown" <brownwp[at]longwood.edu> wrote:
- quote -

Yup - §2032(c).

Stu

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joetaxpayer wrote:
- quote -

After all expenses are paid would any taxes be do then? and
when the balance would be divided among her heirs or
beneficiaries would each one be liable for taxes on what
they receive?

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"Herb Smith" <smithf...[at]aol.com> wrote:

- quote -

More specifically, the alternate date can be used only if it
lowers both the taxable estate and the estate tax.

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"Shyster1040" <Shyster1...[at]nospamhotmail.com> wrote:

- quote -

The alternate valuation date for valuing the assets of the
decedent can only be used if this is a "taxable estate"
(i.e. gross assets exceed $2,000,000). If you are not
required to file form 706 (Estate Tax Return) where would
you make this "election"?

- quote -

Oh yeh, just tell this 95 year old lady that she has to move
out of her home of 25+ years and go live in the back room of
a relative -- just so she can die and they won't be
inconvenienced by having to pay a little capital gains tax
when that happens. I will practically guarantee that the
only way you are getting her out of there is feet first.

It ain't going to happen and you are just reinforcing
everyones perception of lawyers by suggesting it.

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"mac" <jj120e[at]nospam.net> wrote:

- quote -

No. See IRS Publication 551.

--
Phil Marti
Clarksburg, MD

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In general, no.

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joetaxpayer wrote:
- quote -

The $90K would be all she possessed at death. She inherited
the house and land herself which would be worth $90k. Does
that effect the basis?

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mac wrote:

- quote -

The value is well below anything that triggers estate tax.
After expenses, no tax will be due. Basis steps up to market
value on death. (Is the rest of her estate over $2M?)

JOE

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As a general rule, and with the caveat that, based on all of
the facts, there may be wrinkles and exceptions that apply
in your case that aren't apparent from the facts you
described, the basis will be either the fair market value at
the date of death, or at the alternate valuation date chosen
by the executor if s/he makes the proper election (generally
6 months after death).

Thus, if the FMV is $90k at death, and the property is sold
for $90k, there will be no taxable gain on the sale. While
the $90k will be added to the estate for estate tax
purposes, unless the unified credit has been used up, that
$90k shouldn't be subject to estate tax.

If the property is sold for more than $90k, because the
estate is required to distribute all of the proceeds to the
beneficiaries, as a general rule the beneficiaries will be
taxed on their share of the gain from the sale. Conversely,
if the property is sold for less than $90k, the
beneficiaries will report their share of the loss.

If the property is expected to sell for more than the value
it will have on the date of death or the alternate valuation
date, one alternative would be to have the lady sell the
house herself and exclude all gain on the sale under Sec.
121 (provided she otherwise qualifies).

Of course, the downside to that is that she will still need
a place to live, and will have to spend some of the proceeds
to rent a place (unless one of the rellies is willing to
have her live with her/him).

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mac <jj1...[at]nospam.net> wrote:

- quote -

The basis in the house and land is their fair market value
on the day the 95 year old dies. Besides a possible estate
tax return (if the 95 year old was quite wealthy), an estate
income tax return may also have to be filed. If there are
any taxes due, the estate pays them.

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"mac" <jj120e[at]nospam.net> wrote:

- quote -

The basis is the property's value at the date of death, so
there won't be any gain to report, assuming things move
along.

--
Phil Marti
Clarksburg, MD

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A lady age 95 dies, leaving a house and land which she
inherited 25 years ago. Her Will says: the house and land
valued at approx $90,000 is to be sold, all her expenses
paid then, whats left of the money to be divided among
neices and nephews. Questions: How will the Basis be
decided? Who will have to pay taxes and when? What can be
done to reduce taxes after her death?

Thanks,
Mac

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