I am assuming that in 1980, the "gift" was actually inheritance
. If it was a "gift" not related to death, then the following several paragraphs DO NOT APPLY. I have addressed the issue of a "gift" later in this response.
In 1980 the appraised value, at the date of death, is the "cost" (basis) of this property, PLUS the costs of any capital improvements you have made in the intervening years - this would be improvements that increased or maintained the value of the property - NOT "repairs" ( for example, a "new" roof is a capital improvement, replacing "part" of the roof because of damaged, missing shingles, etc., is a "repair" not a capital improvement.)
In 2004 the sale price, $300,000 is used to compare to the "basis" in the preceding paragraph. Comparing these two figures will produce long-term capital gain
, which will be split among the three of you. Each of you will report this on your Schedule D
, attached to your 1040 for 2004 and pay tax on that gain.
The "filing fees" you mention and all other costs of the sale will be used to increase your "basis" in the property before comparing basis to sale price.
IF THE PROPERTY WAS INDEED A GIFT, AND NOT INHERITANCE, then the "basis" in the property is the lower of (1) the cost, plus capital improvements, on the books of Grandfather, or, (2) the fair market value at the time the gift was made, WHICHEVER FIGURE IS LOWER. This figure is then used to compare to the $300,000 sale price.
I am hoping that the transfer of ownership to your Mother and her Brothers was indeed as an inheritance, and not as a "gift" as you describe above. I suspect, as a gift, you will have much more gain and much more tax to pay on the property.
If you have any further questions, please contact me.