taxmanrick Posted July 1, 2020 Report Share Posted July 1, 2020 This one should be easy.... Mom, sole owner of a house she lived in, passes away. Her only two children, daughters Abi and Zel, inherit the property. Stepped up basis of the property at death is $150,000. Zel doesn't want anything to do with the house, so she accepts $15,000 in cash from Abi to "buy" Zel's share. The deed is recorded with Abi as the sole owner. At the time the deed is recorded, what is Abi's basis? a) $165,000 b) $150,000 c) $90,000 d) $75,000 e) something else Thanks! --Rickc Quote Link to comment Share on other sites More sharing options...
Possi Posted July 1, 2020 Report Share Posted July 1, 2020 I'd say she inherited half, or 75k. Purchased $15k.$ I say $90k. Let's see if I'm right. Quote Link to comment Share on other sites More sharing options...
DANRVAN Posted July 1, 2020 Report Share Posted July 1, 2020 $150,000. The transfer from Zel is a part purchase and part gift of Zel's basis of $75,000 ($15,000 + $60,000). 2 Quote Link to comment Share on other sites More sharing options...
Possi Posted July 1, 2020 Report Share Posted July 1, 2020 2 minutes ago, DANRVAN said: $150,000. The transfer from Zel is a part purchase and part gift of Zel's basis of $75,000 ($15,000 + $60,000). OHHHHHHH.... hmmmm. Good. Quote Link to comment Share on other sites More sharing options...
taxmanrick Posted July 1, 2020 Author Report Share Posted July 1, 2020 Thanks, folks! I see both Possi's and Danrvan's suggestions as reasonable. Of course, I like Danrvan's better (sorry Possi!) Is there anyone else out there who would like to weigh in? Thank you. --Rickc Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted July 1, 2020 Report Share Posted July 1, 2020 Losses on sales to related parties are not deductible but are added to the basis of the buyer, so 75k + 15k price + 60k loss = 150k (ta da!) On a related note, who would sell a 75k asset for 15k? I guess they're either well enough off and/or really love their sibling. Quote Link to comment Share on other sites More sharing options...
taxmanrick Posted July 1, 2020 Author Report Share Posted July 1, 2020 Thank you, Abby. $150,000 is what I will use to figure gain/loss on the sale. --Rickc Quote Link to comment Share on other sites More sharing options...
Pacun Posted July 5, 2020 Report Share Posted July 5, 2020 So, Zel's has to file a 709 form? Quote Link to comment Share on other sites More sharing options...
Max W Posted July 9, 2020 Report Share Posted July 9, 2020 On 7/1/2020 at 1:16 PM, Abby Normal said: Losses on sales to related parties are not deductible but are added to the basis of the buyer, so 75k + 15k price + 60k loss = 150k (ta da!) On a related note, who would sell a 75k asset for 15k? I guess they're either well enough off and/or really love their sibling. They may have thought they could take the $60,000 loss. 1 Quote Link to comment Share on other sites More sharing options...
GLJEANNE Posted July 9, 2020 Report Share Posted July 9, 2020 On 7/1/2020 at 3:16 PM, Abby Normal said: Losses on sales to related parties are not deductible but are added to the basis of the buyer, so 75k + 15k price + 60k loss = 150k (ta da!) On a related note, who would sell a 75k asset for 15k? I guess they're either well enough off and/or really love their sibling. Oh they may really hate the sister, and worth it to get rid of her. 3 Quote Link to comment Share on other sites More sharing options...
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