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- Contested Property: Beneficiary Inheritance
Contested Property: Beneficiary Inheritance
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hmosbergea
Level 3
01-09-2023
11:16 AM
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Contested Property: Beneficiary Inheritance: Gain or Loss
Court Judgment of Possession took 10 years for Beneficiary to receive following inherited property:
Home FMV at date of death (2012) = 130,000.
Misc. (tractor + truck) FMV at date of death (2012) = 22,000.
Due to inheritance being contested, it took 10 years for court settlement.
Home FMV at date of court settlement (2022) = 210,000.
Misc. (tractor + truck) FMV at date of court settlement (2022) = 5,000.00.
Home sold in 2022 for 200,000.
Misc. sold for 6,000.
QUESTIONS:
What is basis of each?
What is reportable tax gain or loss of each?
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5 Comments 5
BobKamman
Level 15
01-09-2023
11:33 AM
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FMV at date of death. I would have to think about adding costs of contest to basis. Was anyone living in the home? Was it rented? Who paid the property taxes, insurance, maintenance and repairs during that time?
hmosbergea
Level 3
01-14-2023
07:10 PM
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Property inherited is home + land with FMV at dod (10 years ago) = $130,000. When contested will was finally settled by court, Bene began fixing up for sale treating property as investment property.
A cousin to the deceased contested the will.
The Bene (unrelated to the deceased) paid $60,000 in legal fees to the attorney over the 10 years.
None of these legal fees were ever deducted.
The property sat unoccupied for 10 years.
My question is:
Can any of these legal fees be capitalized (added to basis) since they were for legal expenses related to "acquire, perfect, defend, or clear title to business or investment property"?
hmosbergea
Level 3
01-16-2023
07:59 AM
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Home = 130,000
Personal Property = 20,000
Oil & Gas Royalties = 50,000
Legal expenses over 10 years = 60,000
BobKamman
Level 15
01-16-2023
09:36 AM
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I have clients with oil & gas royalty interests that were worth practically nothing ten or twelve years ago -- then they started collecting six-figure annual payments. I suspect in this case, the $60,000 in legal fees were worth it not for the house, but for the lifetime income stream. It's a good idea to share all of the facts here, rather than being selective in order to encourage the answer you want.
