Discussion:Pre 1977 100% step up upon Spouses' Death
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Discussion Forum Index --> Advanced Tax Questions --> Pre 1977 100% step up upon Spouses' Death
Discussion Forum Index --> Tax Questions --> Pre 1977 100% step up upon Spouses' Death
| 28 November 2007 | |
| I have looked at similar discussions on this matter but I have not received a definitive answer. Since I was practicing in 1977 (I hate to admit it) and recall applying a 100% step up in basis for the surviving spouse, I believe Husband should receive 100% step up regardless of community vs non community property state.
Fact: Client lives in Pennsylvania (non community property state) and buys a house in 1960, owned jointly by the entireties. Wife dies in 1998 and a 706 is filed with a FMV of the marital home at the time of death (1998). I believe surviving husband is entitled to the 100% step up in basis because the house was pre 1977. I write to IRS (their email feature is great) and they recite back to me from their Pub.551 and seem not to take in to consideration the fact that this is a pre 1977 joint purchase. I look up discussions on this board and see IRC Section 2040 listed which again discusses % of contribution and community property state. Can anyone direct me to cases which show my position (i.e., that the fact the property was purchased jointly prior to 1977 in any state allows the full step up). Thanks for your help. Elissa Kirkegard | |
| 28 November 2007 | |
| Try Gallenstein - | |
| 28 November 2007 | |
| Hi the Gallenstein case says under your facts the wife would have had to pay 100% of the house for the surviving husband to get a 100% step up. Generally in the "old days" the husband might have been only working and therfore if HE died first the surviving WIFE would get the 100% step up. But if the wife who didnt work dies first the surviving HUSBAND is not entitled to any step up. When you get the case and apply the facts I bet you will let the spleeping dog sleep and be thankful for 50%. There is no position for your full step up thats why you cannt find it. bye | |
| 28 November 2007 | |
| I agree - unless you can make an argument that the wife contributed all of the cost of the house from her own funds, the husband doesn't get a 100% step up in basis. If the entire FMV was included on the form 706 filed for the wife, perhaps this was the case. | |
| 29 November 2007 | |
| Why was the home included in the 706 for the wife if the husband provided the consideration? | |
| 29 November 2007 | |
| Because it was joint property and he who prepared wanted husband to get at least half the step up? ♫ | |
| 29 November 2007 | |
| Thank you all for giving me your input albeit rather disappointing. I did read Gallenstein fully and was surprised that this decision dates back to 1991-1992. It was 1996 that a Pennsylvania CPA newsletter indicated that the 100% step up was available to PA residents who held marital property jointly pre 1977. I guess that is not a valid defense to taking it. Thanks again. | |
| 29 November 2007 | |
| Erik, that is a common misinterpretation of Gallenstein [that 100% stepup applied to ALL pre-77 jointly held property]. I have heard it or seen it in many publications (incorrectly) by many tax and financial organizations. | |
| 30 November 2007 | |
| EKirkeg, the PA CPA newsletter was probably correct. However, the 100% step-up would only be available if the surviving joint tenant provided none of the consideration for the purchase. | |
