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MequonCPA
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
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Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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A client quit claimed her house 1/3 to her daughter and son

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A client quit claimed her house 1/3 to her daughter and son and kep 1/3 for herself in Nov 2009. SHe then died in June of 2010. I believe she should file a gift tax return for the gift but would all of them get a stepped up basis or just her. Does she file a gift tax return for 2009 or 2010? Is there anything else we would need to consider? Thanks in advance for your help.
Submitted: 3 years ago.
Category: Tax
Expert:  MequonCPA replied 3 years ago.
Dear 5ly10tm9 -

A gift tax return should be filed for 2009 if the fair market value of each 1/3 interest exceeded $13K. There should be no tax to pay with the return unless lifetime taxable gifts exceed $1 million.

While the value of the gift determines the amount of the tax, each child's basis in their 1/3 interest will be their mother's basis. Only the mother's interest receives the (potential) step up. For 2010 there is no estate tax. Because of this there is only a limited step up available for the estate. Up to $1.3 million in step up is available to be allocated by the personal representative among all estate assets.
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2323
Experience: CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
MequonCPA and other Tax Specialists are ready to help you
Customer: replied 3 years ago.
A small clarification, in 2010 there is no estate tax but still do we have to file the estate tax returns. With the death of the mother the 1/3 share is now passed on to the other two people so what would be the basis. SOrry fro repeating the quetion, needed to be clear on this topic because the hosue was purchased nearly 25 years abck so ther esi lot gain to consider. Also there were some bank accounts jointly held- is that also to be reported in the gift tax returns?
Expert:  MequonCPA replied 3 years ago.
What is the value of the estate
Customer: replied 3 years ago.
its low, max would be half a million.
Expert:  MequonCPA replied 3 years ago.

At that level, no estate tax return is required. However, an election form (yet to be finalized) will be used to allocate the basis adjustments.

MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2323
Experience: CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
MequonCPA and other Tax Specialists are ready to help you

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