Leaderboard

Life estates work best when they terminate on the last parent's death. When they don't, you will run into some complications. The following, gives a pretty good explanation, with examples, of a life estate, sold prior to TP's death. Note - Link is invalid. I've sent a PM asking Max W to follow up with the link or to provide it so that this post can be edited with it included.

Am waiting for the link to be fixed. I have been researching this very question for over a week. However, in my case, the entire house was sold; so Mom is one of the four who get a share. Yes, it is definitely a gift and basis is whatever Mom's basis was when she acquired the property. There are possibly some obscure calculations to be done. Also, if sold at a loss; no capital loss can be taken.

That's not an error message but a footnote that's actually been required since the tax act of 1986 and fall within the scope of sec 263A interest cap rules and the related party rules. The article below gives an overview of when costs are required to be capitalized, possibly even some costs outside of the partnership. It also talks about when capitalizing might not necessary under deminimis rules depending on the level of ownership but that related party rules must be considered before making a final decision on that. http://www.gilaberttax.com/2013/03/26/avoided-cost-k-1-footnotes/