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Hi Jay and welcome to Just Answer!Several issues... 1. First of all - you are correct - inheritance is not a taxable income in the US.
In the US - inheritance is not taxable income and you do not need to be reported to the IRS - there is no inheritance tax in the US.
There is no any amount limit. Please see for reference IRS publication 525 page 31 left column - - http://www.irs.gov/pub/irs-pdf/p525.pdf
Gifts and inheritances. In most cases, property you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you.
2.Inherited property gets so-called stepped up basis equal to the fair market value of that property at the time the decedent passed away. See IRS publication 551 page 9 - http://www.irs.gov/pub/irs-pdf/p551.pdfIn order to receive a stepped up basis - the property must be included into the estate for estate tax purposes - regardless if the federal estate tax return was required or not. 3.When the property is sold - the sale transaction is reported as (sale price) - (basis).Thus if the property is sold shortly after it was inherited - there will not be any taxable gain - and in most situations - there might be a small loss because of selling expenses.
Just to be clear, the house didn't come as a regular inheritance. It was quitclaimed to my sister and I 20 years ago. Does that make any difference?
If your mother owned the property and retained the life estate - the property is included into her estate - and considered as inherited.
I guess I wasn't sure who 'owned ' the property after the quitclaim.
the life estate is considered a partial ownership.
So, does the 'partial' affect any of this?
The key issue - if the property is included into the estate or not. If your mother owned the property and after transferring the title - she retained the life estate - the property is included into her estate - and considered as inherited.
Thanks so much. I really appreciate the timeliness and quality of your response.