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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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MOM CREATED QUITCLAIM TO 3 CHILDREN CIRCA 2005, SHE DIED IN

Resolved Question:

MOM CREATED QUITCLAIM TO 3 CHILDREN CIRCA 2005, SHE DIED IN DECEMBER OF 2009,
3 CHILDREN FILED THE QUITCLAIM IN JANUARY OF 2010. WHEN IS THE COST BASIS APPLICABLE? THIS IS IN MICHIGAN. WAS STEPED UP BASIS IN EFFECT IN 2010? THIS IS TO FIGURE 2010TAX RETURN FOR THE CHILDREN(ALL SENIORS).
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

LEV :

Hi and welcome to Just Answer!

LEV :

The question is - was the property transferred to you when your mother was alive (gift) or you became an owner as a result of her death (inheritance)? Based on your information - your mother gifted the property back in 2005 - thus you have the same basis as your mother had at that time (purchase price - assuming the property was purchased plus improvements and some other expenses during the time she owned the property). You will add improvement expenses after 2005 (since you became owners).


The fact of registering the transaction after her death makes no difference for the fact that the property was gifted. However local authorities may assess additional property taxes if your mother claimed any property tax reduction based on her ownership while the property was actually gifted to you.


 


If the property were inherited – means you become owners based on her will or through the inheritance law as a result of her death – you might have a stepped up basis equal to the fair market value of the property.

LEV :

Please also verify if the quitclaim has a "life estate" provisioning? Let me know if you need any help or clarification.

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