Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

Sale of the house in a life estate before the life tenant passed away

Taxfun
Level 3

Father transfered his personal residence to his daughter and son and set up a life estate in 1980. The house was sold in 2020,

1. Form 1099-S for net proceeds was only issued to his son. What is the best way to  report father or daughter's portion gain on his son's return?

2. Son's basis to calculate the gain: The adjusted basis at the time of life estate set up multiplied by the percentage in IRS tables at date of life estate set up. Is it correct?

0 Cheers
7 Replies 7
pamdory
Level 7

I'm not sure that you apply the IRS actuarial tables to establish basis.  I believe those are used to calculate values for other reasons.  Basis would be what it was in Dad's hands prior to the transfer adjusted by any of the usual basis adjustments that may have occurred since.

If Dad transferred to the kids, why would he have basis?

Sounds like either the title company made a mistake or Dad didn't transfer to both son and daughter.  

0 Cheers
Taxfun
Level 3

father has right to live the house for life.

0 Cheers
qbteachmt
Level 15

"father has right to live the house for life"

Who sold it, then? You stated the father did not die before selling?

That creates a bit of a legal mess and a tax mess.

*******************************
"Level Up" is a gaming function, not a real life function.
0 Cheers
Taxfun
Level 3

son sold the house before father passed away.

0 Cheers
qbteachmt
Level 15

Son sold a house that belonged to the Father, Son and Sister. And no one gets a step up in basis to the sale price.

Read this similar topic:

https://proconnect.intuit.com/community/proseries-tax-discussions/discussion/sale-of-life-estate-bef...

This might get ugly.

*******************************
"Level Up" is a gaming function, not a real life function.
sjrcpa
Level 15

Do you have the settlement sheet for the sale?

If only son is listed as seller, the situation is not as you described-son, daughter and life estate for father.


ex-AllStar
0 Cheers
Taxfun
Level 3

the settlement sheet listed both children's names. The entire interest in the  house was sold.

0 Cheers