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I'm currently on the phone with PPL for a reduction in a 2023 refund for a 2019 additional assessment. My client never got the CP letter since his wife is in the army and they move quite frequently. His address on record was/is his dads and apparently his dad didn't take notice of any IRS letters. I'm not sure if I will be able to do anything for him. Learned a lesson though - I'm getting 2848 for all my clients in the military so I can get the correspondence.

In the case of a Life Estate, the basis is stepped up to the value on date of death. Besides which, being an inheritance as well as a (gift), there are no tax repercussions unless there was a profit on value on date of death. The gift tax return was unnecessary at the time that the Life Estate was drawn up. In the case of a Life Estate, the property is not (gifted) until the date of death.

Because a life estate changes the gift into an incomplete gift. https://www.stoufferlegal.com/blog/navigating-life-estate-remainderman-tax But the death of the "previous owner" essentially wipes out the life estate and the beneficiaries get a full step up in basis. Basis is more complicated if the house is sold before the life estate owner dies.

Thanks again. I'm now wondering if this was something thought to be a solution outside of actual legal guidance. It seems to me that the gift tax returning, gifting the condo to the daughter, was a way to 'transfer' ownership without specifying a life estate, that it was de facto. I've asked the questions. The closing document shows daughter's name only as seller. I wonder what the deed shows.

Thank you, Marilyn! As I wrote, this is my first, so unsure of how to handle. Client will be so happy! I have no idea why there was a gift tax return, not my client at the time or maybe I would have known all this already. I will double check on documentation showing life estate rather than just letting mother live there. Client told me 'life estate,' but I want to see it. I will still do research but have great guidance now.

Thank you, ladies. And, duh, when all else fails, read the instructions! I did tell mom and daughter that I want to see her LTC contract to know what's covered (she talked as if it's NOT the per diem coverage, but need to read her contract).

And I learned something new today. Thanks for the education. Tom Longview, TX

If it truly became a Life Estate, it should be so noted and recorded on the deed. In a Life Estate, the mother would retain a remainder ownership until she passed. She would also be responsible for all expenses and taxes until she died. The gift tax return woud have been moot. I just had my first gift tax return this year. Seems we are never too old to learn something. I don't believe that Life Estates are any longer a legal option unless drafted before 2017. Then, it would be Grandfathered in. (This may only be true in WI. I have no further knowledge pertaining to other states.)

It's my understanding that basis gets full step up in value as if the life estate never existed.

maybe file 8821's for all those clients and wait until they need representation (and that you want to represent them) for the 2848's? just a suggestion

When you say son will get NJ home, is that per the will or the trust document? If the will states he gets the NJ home, then it goes through probate, but you said the will states everything goes to the trust? IF the NJ home is not in the trust, then the will controls and NJ home moves to the trust after going through probate, then gets titled to the trust and then distributed to the son as a beneficiary of the trust (if that is the way the trust is written). Seems very messy. I think the will is in the way as it relates to titled property. All the titled property (real estate) should go to the trust and is distributed per the terms of the trust after death of the grantor. The will can move the personal items of the decedent into the trust normally without probate unless there is a large amount of value associated with that personal property (Heirloom jewelry, expensive silver, artwork, etc) and if so these items should be listed as assets of the trust. IRAs should never, IMHO, be transferred to a trust. They should properly designate the beneficiary and move by operation of law to the designated beneficiary on death. Same with bank accounts and brokerage accounts that are supposed to go to an individual. TOD is a better option. If the trust is supposed to get the cash accounts, then title the account to the trust. Others may disagree, this is how I would advise the client based on your posted scenario. Tom Longview, TX

See instructions for 8853 Section C.

Yes, a transcript of the account so you can see what actually happened. Could be a previous debt or inaccurate estimates or a host of other possibilities. Wait for the IRS notice.

Thanks, AbbyNormal! I did not expect that. Even though the client/daughter owns it now? Research ahead!

I was also a Parsons client and remember how well their programs worked. Fair enough to hold a vendetta if you choose to, but their ProSeries Professional product has worked well.

It was tax year 2012. I remember it well and not fondly!

Calling is next to impossible and useless. My clients are also receiving weird letters with no explaination; just a Balance Due. For what, we say? The IRS is a mess. As for WI, not the case. I had a client receive 7 letters from them last Friday, all about the same subject, but in different format. Overkill in the other direction.

https://verifyle.com/Verifyle_8878-8879_compliance.pdf

Oh cool!

Taxpayer called that the IRS had shorted his 2023 refund by $1620 (direct deposit) and was wondering why. No correspondence from the IRS. Looking at his return he had a LT capital loss of $13,500 which of course was limited to $3000 as shown on the return. Looks like they adjusted his refund calculated $13,500 at his effective tax rate of 12% = $1620. Does not make sense. If they were disallowing the loss then should have been $3000 at 12% = $360. Seems very strange. Am I missing something?

I decided to answer my own question A Tax Return Transcript just shows the original line items without any subsequent changes. A Record of Account Transcript shows the tax return line items plus all of the subsequent changes. I get the impression that there's no history of all of the notices?

Now that that they have restarted sending notices, the current notices just show a balance due, so we and our clients never see the suspended notices that were never mailed. If a client signs up for an online account, can they see a history of all of the notices?