Deathbed quick claim gifts prior to death

[PeterCicciari]

I have a client who quickly claimed her house to her son to avoid probate for $100. The house had a mortgage of $136000, and I need help figuring out a new basis for her son. She died a week after signing the quick Claim deed. (Big mistake: the house has a value of $450,000.)

[BobKamman]

The term is "quitclaim" deed.  Not any quicker to prepare than any other kind of deed.  Since it was a gift, her son gets her cost basis, rather than value at date of death.  If her cost basis was less than the $136K mortgage, that would be his cost basis (I think, I don't deal much with hillbilly probate).  

Did he quickly race to the appropriate government office to record the deed?  What fools these mortals be.  

[abctax55]

Her basis = his basis (gifting rules).

Was he able to 'assume' the mortgage?

[PeterCicciari]

Yes, the mortgage is his now.

[BobKamman]

Doesn't really matter if he "assumed" the mortgage -- he accepted the property, subject to the mortgage, so if he keeps one he keeps the other.  I think the result here is that it's considered a bargain sale to him for the amount of the mortgage, so that goes on Mom's final return (probably eligible for the exclusion) and his basis is what he paid for it.  Although if her basis was higher, maybe he can use that instead.