How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Chad Oberg Your Own Question
Chad Oberg
Chad Oberg, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 174
Experience:  10 + years of accounting and tax experience, financial statements and business planning
30052784
Type Your Tax Question Here...
Chad Oberg is online now
A new question is answered every 9 seconds

My dad just died and left me his estate which basically consists

This answer was rated:

My dad just died and left me his estate which basically consists of a house and nothing else. Before he died, he left two differnet legal instruments regarding his estate. He left a will leaving the house. Before he drafted his will he also drafted a Life Estate Deed -- A Warranty Deed to Child Reserving Life Estate to Parent. This deed has never been filed or recorded with the City Register.

Now that my father has died, I am about to petition for probate my father's will. Because the estate is just a house, I could also just file the deed instead of petitioning the will for probate.

Here is my question: If I petition for probate, The cost basis for the house gets "stepped up" for capital gains purposes.

If I instead record the deed--the Life Estate deed's first paragraph reads "FOR VALUABLE CONSIDERATION OF TEN DOLLARS and other good and valuable consideration, grantor ... grants... etc. etc... .
Is my costbasis for the house 10 $? Or does it get stepped up with his death??????

Customer,

 

Property Acquired from a Decedent

The basis of any property acquired from a decedent on or before January 1, 2010, is its fair market value on the date of the decedent's death or on the alternative valuation date. This "stepped-up" basis rule applies to property acquired by bequest, devise or inheritance. It also applies to property required to be included in the decedent's gross estate for federal estate tax purposes even though it was the subject of a lifetime transfer, unless the transferee sold or otherwise disposed of the property acquired directly from the decedent without passing through the estate, qualifies for a "stepped-up" basis (Code Sec. 1014; Reg. Section 1.1014-1 thru 1.1014-8.

 

Please keep in mind that you do not pay a capital gains tax when the transfer occurs. You only would adjust the basis to fair market value. If you sell the house, then a gain or loss would occur.

 

Regards,

 

Chad

Chad Oberg and 3 other Tax Specialists are ready to help you

Related Tax Questions