How to report a gifted home sale

[choose355]

A parent gifted a home to his three children ten years ago with understanding he would live there till death. The parent passed away in 2019, house was sold in 2020. The house is in NY State. The client lives in CT. What IRS form is the sale reported on? Is it correct that any Capital Gain is reported to NY only? My client is only responsible for 1/3 of any gain. Do I report all entries as 1/3 the amounts?  basis--sale price--etc.

[sjrcpa · Accepted solution]

Report on Schedule D/Form 8949.

Taxable in NY and CT. CT should give credit for tax paid to NY.

I'd report your client's 1/3.

[TaxGuyBill]

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@choose355 wrote:

with understanding he would live there till death.

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That sounds like it very well could be a "Life Estate".  *IF* that is the case, the property gets a step-up in Basis and there may not be a gain (there could even be a loss).