peauff
Level 3
This widget could not be displayed.

I have a client who co-owned property with a family member (50/50), and received full title after that family member's death.  To compute the stepped up basis of the property for it's subsequent sale, I have adjusted only the inherited 50% basis per below.  Does this make sense?

 ClientFamily MemberTotal
Original Cost90,00090,000180,000
Value when inherited112,500112,500225,000
Home Basis For Sale   
Cost90,00090,000180,000
Stepped up basis 22,50022,500
Basis after inheritance90,000112,500202,500
    
Labels (1)
0 Cheers
sjrcpa
Level 15
This widget could not be displayed.

Yes


ex-AllStar
PhoebeRoberts
Level 9
Level 9
This widget could not be displayed.

I agree with the logic of your calculation. If there was any prior depreciation taken, I'd keep the two halves as separate assets, but that's a matter of personal preference. If the decedent had any passive activity losses suspended with respect to the property, there are sometimes some weird adjustments to basis, too.

View solution in original post

Accountant-Man
Level 11
This widget could not be displayed.

Except that I believe in CA(and maybe other community property states) the inheritor gets a step up for 100%. Although that might only apply for married couples.

** I'm still a champion... of the world! Even without The Lounge.
PhoebeRoberts
Level 9
Level 9
This widget could not be displayed.

You only get community property treatment if the property is held as community property. I don't think there are any states which permit non-spouses to hold property as a community.

BobKamman
Level 14
This widget could not be displayed.

"Family member" could include spouse, but probably doesn't here.  

If there was no depreciation, maybe it was just raw land.  If it was a second home, how much of the selling expenses would you allow?  

0 Cheers