Basis question

[artp]

Taxpayer (son) sold investment real estate acquired by gift (quit claimed deed) from Mom. Sales price to unrelated party was $60,000.  Mom inherited 50% interest in the property from her father.  The other 50% went to Mom’s brother. Property was valued at $66,000 in the estate.  Several years later when value was depressed Mom bought her brother’s 50% interest for $12,000.

 

Question: What is son’s basis in the property?  Does he get date of death value for 50% interest that his mother purchased from her brother or is that 50% based on the $12,000 that she paid?

[jklcpa]

Son's basis is mom's basis of $45K.  Mom's basis is $33K for the 50% inherited (50% of $66K total value in the estate) plus $12K for the other 50% she acquired by purchase from her brother.

Ask if mom made any improvements to the property before deeding to son, or if son made any improvements before the sale.

[kcjenkins]

I agree with Judy, as a gift it's based on the giver's basis, not the basis of the person she bought it from.  

[artp]

Thanks for the reply. There were no improvements made.

[artp]

One further thought.  Does the fact that the brother can not deduct the $18K loss  ($30K-$12K=$18K) have any effect on Mom's basis that gets passed on to the son for that 50%? Is that $18K just lost out to everyone?

 

[gfizer]

3 hours ago, artp said:

One further thought.  Does the fact that the brother can not deduct the $18K loss  ($30K-$12K=$18K) have any effect on Mom's basis that gets passed on to the son for that 50%? Is that $18K just lost out to everyone?

 

The $18,000 loss would have been dealt with by the brother when he reported the sale of his interest to your client's mother.  It has no affect on your client's basis