Filing question

[KSIDLEY]

I have a client, whose mother lives with him due to age. She only receives SS, and she sold her home and received a 1099s. She had a reverse mortgage, her basis was $131,500. the reverse mortgage payoff was $241,383 sell was 400k. Her proceeds were $158,813. This is my first reverse mortgage case. My questions is does she even have to file?

[BobKamman]

The mortgage has nothing to do with it.  Her gain is proceeds less basis.  You didn't tell us selling expenses, but they would reduce the gain of $268,500.  She qualifies for the $250,000 exclusion, but you still must file to claim it.  Are you sure of the basis?  Is that just the original cost, or does it include improvements over the years?  Is she a widow?  Did she qualify for stepped-up basis when her husband died?  

[KSIDLEY]

Thank you for the reply,

The basis is original cost, she is a widow, however her late husband passed away several years ago. She doesn't qualify as a widow any longer. I will check on the step up basis.