2018 Mr Smith buys house for 88k in his own Trust's name.
2019 Mr Smith transfers house from Trust and records deed in his name AND add's my client's name to Deed.
2021 Mr Smith dies. Client finds out his name is on deed after death. Client sells house for 140K.
Client receives 1099-S. What should I be using as cost basis on the sale? 88K? FMV at date of death?
Never had this situation before and need some help and guidance.
Many Thanks!!!
"How do you know? Did you see the Inventory?"
This property was only asset NOT in Mr Smith's estate. He quick deeded it out of his estate and into him and my client's name in 2019. My client had ZERO to do with the estate or sale of any other assets.
There is apparently no way for client to find out if Mr Smith paid or didn't pay gift tax. He did not gift anything to anybody before his death. He just did the quick deed on this property.
No clue what to use for FMV on this sale. <sigh>
"Why, me Lord" by Shaggy
"He did not gift anything to anybody before his death."
Yes, he did. You need to look at Timing.
"Client finds out he owns property next door to Mr Jones after Mr Jones dies. Is it a gift?"
It was Gifted in 2019, according to what you are telling us.
"He just did the quick deed on this property."
Yes, that is how he gifted Value to your client.
"No clue what to use for FMV on this sale."
You had no sale, in 2019. There is no applicability of FMV.
"Joint w/ right of survivorship? Yes"
Then your client inherited 1/2 at the FMV, and it seems the client's sale is timely to the DOD, so use that sale price for FMV.
"My client had ZERO to do with the estate or sale of any other assets."
You keep stating things on both sides of the fence, and either they both don't apply, or they both do apply. That is confusing us.
"Who knows what Mr Jones meant it to be."
It is either Sale or Gift, in 2019.
"Is there issue with gift tax in this situation? Now it's not just a BIG shock, he has to pay gift tax on it because Jones neglected to do so?"
Gift tax is the responsibility of the Giver.
You've brought a lot to the topic that does not apply. You need to narrow down to what applies and drop all this other stuff. There is a lot of protesting going on, for who didn't know what, and that doesn't matter. What IS and what legally exists, is what matters.
The probate and estate documents will be helpful. The legal papers matter. What someone else remembers or thinks or intended, does not matter.
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