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Life Estate and Remainderman

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Level 1

Mom retained a life estate in home.   Her name and her 2 children's name were on the deed at the time of the sale.     The Property was sold prior to her death.  (October 2019)   She is still living, but had to move to a nursing home.   

I have figured the basis at the time of the gift, (2016) but I am confused as to what table to use to determine the % used for the life estate and remainderman for the sale of the property.    

Age at time of sale was 88.   Do I use table 5 under section 7520 to determine the interest rate, then go to Table S for that applicable interest rate - go to age 88 and find .08521 for the life estate and .91479 for the remainderman ? 

or do I go to Appendix A-17 ( Life estate and remainder interest table ) to find age 88 is .30859 for life estate and .69141 for remainderman? 

 

Thank you in advance for your help

 

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3 Replies 3
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Level 15
How much is the gain for each owner? Are they all using it as personal residence? Is the IRC 121 exclusion going to be enough to eliminate gain, regardless of all the fretting you are doing over tables?

ex-AllStar
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Level 1

only the mother can use the IRC 121 exclusion, both children have to realize the gain.     The total gain is about 32,800.  

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Level 11

Follow the money.  Who got the proceeds?  All of it to Mom?  If so, substance over form -- they really didn't intend a gift, they were just trying to avoid greedy lawyers.  Some of it to the kids?  How did they figure that?  Don't we need the ages for both?  All of it to the kids so taxpayers could fund the nursing home while Mom funded the cruise?  Then 91.5% to the kids sound about right.  

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