Discussion:Life Estate Calculation, Mechancs of..

From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.

From TaxAlmanac

(Difference between revisions)
Jump to: navigation, search
Revision as of 21:44, 29 October 2009
Kevinh5 (Talk | contribs)
(so in return, I')
← Previous diff		 Revision as of 22:36, 29 October 2009
Dennis (Talk | contribs)
(There are a vari)
Next diff →
Line 31: Line 31:
{{ForumReplyPost|UserID=Kevinh5|Date=29 October 2009|Text=so in return, I'd like to ask you if you would please complete your [[profile]]. Thank you.}} {{ForumReplyPost|UserID=Kevinh5|Date=29 October 2009|Text=so in return, I'd like to ask you if you would please complete your [[profile]]. Thank you.}}
 +
 +{{ForumReplyPost|UserID=Dennis|Date=29 October 2009|Text=There are a variety of possibilities here, however, none involve a gift. A life tenancy does not come without cost. State law and intent matter. Answers are different for California and New York.}}

Revision as of 22:36, 29 October 2009

Discussion Forum Index --> Advanced Tax Questions --> Life Estate Calculation, Mechancs of..
Discussion Forum Index --> Tax Questions --> Life Estate Calculation, Mechancs of..

Walking Spanish (talk|edits) said:

29 October 2009
Consider the following scenario:

Mother (M) passes away in 1980, granting Daughter (D) a life estate in her residence. Upon the termination of the life estate, the proceeds of the sale of the property are to be divided among 4 people or their heirs. D or her estate is one of the 4 people.

Now D is preparing to abandon the life estate for health reasons. I understand from reading previous posts on this subject ( including the infamous BeatleFred tome) that D is allocated a greater percentage of the basis because of her position as a life tenant. But if she gives up the life tenancy, does the basis now get divided up into 4 equal parts, or is basis assigned at the creation of the life tenancy and does it stay with her, even if she gives it up later?

Also, if basis was allocated in 1980, do I use the rates in effect at that time, or the 7520 rates in effect at the time of sale? Was 7520, which was enacted 10/22/88 intended to be retroactive?

Kevinh5 (talk|edits) said:

29 October 2009
I will venture that the answer to at least one of those questions is 'no', but I'll have to think as to which one.

Kevinh5 (talk|edits) said:

29 October 2009
I would think that giving up the life estate is equivalent to making a gift to the 3 other heirs. You would follow the basis rules for gifts, then. Which would equalize basis among the 4.

Following my own line of reasoning, then all that matters for your question is FMV at DOD in 1980.


I will not address the gift tax issue that D may have, because I don't feel comfortable guessing. And you didn't ask.


Therefore, I can skip your last two questions about §7520 rates. They are moot.

Kevinh5 (talk|edits) said:

29 October 2009
Can I back that up with code and reg?

No.

but you could perhaps pay someone else to, if it matters.

Kevinh5 (talk|edits) said:

29 October 2009
so in return, I'd like to ask you if you would please complete your profile. Thank you.

Dennis (talk|edits) said:

29 October 2009
There are a variety of possibilities here, however, none involve a gift. A life tenancy does not come without cost. State law and intent matter. Answers are different for California and New York.
Retrieved from "http://www.taxalmanac.org/index.php/Discussion:Life_Estate_Calculation%2C_Mechancs_of.."