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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4545
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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wife inherited a life estate in residence from her husband

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wife inherited a life estate in residence from her husband (who died in 2002). Wife was age 59. She has recently remarried, and she and her new husband are going to build a new residence. My question is whether her income tax basis is as it was fixed when age 59, or is her income tax basis at age 70 (her present age)? I know her sale is exempt from income tax, but the value of life estate affects the taxable portion for her children, who are the remaindermen.

rakhivasavada :

If you inherited property from a decedent who died before 2010, your basis in property you inherit from a decedent is generally one of the following and one of them is The FMV of the property at the date of the decedent's death.

The FMV -- is Fair Market Value.

rakhivasavada :

Therefore, in your case, the basis of the property would be fixed (at FMV) as of 2002, i.e. when she was 59 and not present time.

rakhivasavada :

The following IRS link deals with this.

rakhivasavada :

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