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https://www.law.cornell.edu/uscode/text/26/2036 The value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money’s worth), by trust or otherwise, under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death. Sounds to me like as long as they had the right to possess the house until they died, it is included in their estate and the kids get a step up in value. In other words, a de facto life estate should work. In instances where the owner of the property has deeded the property to others but did not retain a life estate in the deed, but nevertheless continued to live in the property as a life tenant, see IRC § 2036 which uses the word “retained” not “reserved”. It has been successfully argued in the past that a right can be retained without being reserved, and that the continued occupancy of the home after the transfer of title, without paying fair market rent, is evidence of an implicit agreement, understanding or assumption of the parties of the transaction. Estate of Linderme v. Commissioner, 52 T.C. 305 (1969)

After a bit more research, I found this on Cornell Law website: life estate A life estate is an interest in property that lasts only for the life of a specific person, usually the possessor of the estate. The owner of a life estate cannot leave the property to anyone in their will as their interest in the property will terminate at their death. The holder has full rights to possess and use the property, and may also transfer their interest during their lifetime. If the measuring life for the life estate is someone other than the possessor, the estate is considered a life estate pur autre vie. A life estate is created by a deed that gives the property to the person "for life" and identifies what should happen to it after that person dies. For example, a deed stating that land would go "to John Doe for life, then to Jane Doe" gives John a valid life estate, and Jane a remainder. John could use the land during his lifetime, and even sell his interest to a third party, but that third party would have to surrender the property to Jane upon John's death. So I'm wondering now and again about the deed. I'm reading this as though the mother (the possessor orignally) transferred the interest during her lifetime (gifted to daughter). But then it seems that the deed must state that the property is given to the person (mother) "for life." The client has not yet responded. I hope they used an estate or real estate attorney.

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

If I can add, I too have been using Verifyle for the last few years. The signature portion is approved through the IRS due to the 2 factor authentication. You do get and can print the certificate which I recommend to. I keep everything digital. Yes, a single email can be used for two people sharing the same email address. I highly recommend this program. The majority of my clients hated Drake portals. I now have at least 85% of them using Verifyle. There are some older folks who just can't seem to deal with any technology. One client suffers from some form of paralysis and can no longer use their hands well. I'm pretty sure Verifyle gives the option of choosing a digital signature or a handwriting signature so a mark can be made. As Margaret said, use workspaces. You have to use workspaces to multiple signatures. Workspaces also keeps thing organized. One thing I want to know is if there is a way to stop a client from becoming the host once I create their account. I have had clients do this which prevents any signing. I'd be happy to help getting someone started. It is easy and you'll love it. If I drop my NAEA membership, I would have no gripes about $9.00 per month. Drake portals has increased to $21.00 per month.

You are amazing! I still have not heard back from the client but will be sure to ascertain that the understanding followed this expectation - as I think it did. I just want to be sure. Thanks to all who chimed in! Always more to learn.

The notice tells you who issued the 1099R. Have the client call them.

This is a legal argument, not the bailiwick of the tax professional. Don't go there. While we aim to please and serve our clients, sometimes they ask too much of us.

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

No, I have had to amend a 941 and it requires mailing. I hate that cause only God knows when and if it will get there. The first one I filed in October of 23, is floating around the world somewhere. The PO can not find it. Yes, it was sent certified with return receipt. I was left no choice but to resend the amendment and hold my breath that two amendments didn't hit the IRS. So far so good.

I think I found it - FECWKST. Thank you very much!

if you use the Foreign income worksheet instead of a 1099-R worksheet, should be able to e-file

The client's lawyer should stick to writing wills and trusts. Disagree...this is just as much a tax issue as choice of entity is to a business. How to make the most cost effective transfer of wealth considering the circumstance and wishes of the client is something we can and should do. Tom Longview, TX

The remainder interest is subject to gift tax and Form 709 should be filed. This from the instructions: "The value of all annuities, life estates, terms for years, remainders, or reversions is generally the present value on the date of the gift." Since this is a gift of a future interest, there is no annual exclusion.

Tom, your thinking is consistent with mine. The way the client's son was explaining it to me, the NJ lawyer was having an issue with putting it on her personal return Sch E. I wanted to check to see if I was missing something. In hindsight, the son may have misunderstood the difference between revocable and irrevocable. Thank you for your response.

Why are you concerned about the rental use of the property? I don't think it is an issue. The trust is revocable, so the income while the grantor is alive will still go on Sch E on her personal return. When the grantor passes, the son will still get stepped up basis. He can then choose to keep it a rental or sell it as investment property. It seems to me that taking the property through probate is an unnecessary step (no matter how easy it is in the state) when you can just title it now in the trust and not have to take that step after the grantor passes. What am I missing that you are concerned about? Is there something else I should be considering? Tom Longview, TX

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.

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).

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

Because I have a vendetta against Intuit, I will never willingly purchase one of their products. I have never forgiven them for what they did to Parsons Tech; the program that I started with in 1992. Also, I see some of my clients struggling with and being limited to use of Quickbooks; which, IMO, is overkill and over priced. So says the person who knows that she should never hold a grudge. I have committed to Max for one more year and am moving on. And, yes, it does do the calculations for the WI OS form.

I too was with ATX during Saber, Max, Zillion Forms days. I am not sure what year it was but there was a year that ATX software had a lot of issues. ProSeries reached out to me with a discount offer ot switch.. I took them up on that offer and am very happy with ProSeries. Intut may very well ofer you a discount if you switch. You can also try the software for free I believe.

I was a long-time user of ATX, back to the days of Saber. It was a product that I depended upon and served me well during the time I subscribed. One of the drawbacks for me was I have a moderate number of clients who work in different states, necessitating the credits for taxes paid to other jurisdictions. ATX used to charge a premium to have that calculation done automatically...I'm not sure if that is still the case or not? I also had to pay an additional fee to use the ATX portal for my clients. I transitioned to ProSeries Professional during the 2021 tax year. The learning curve was minimal as both programs are form based. I've been pleased with the performance of the program, which includes all necessary calculations for the taxes paid to other jurisdictions, populating the appropriate state returns as required. The program also provides "free" use of their client portal and my clients seem to find it easy to navigate. By no way is this post intended as a knock toward ATX, it served me well during my time using it. I just wanted to provide an alternative in the event you are considering a change.