FMV of gift 3 years ago?


B

Buddy

A person received an acre house lot with a trailer 3 years
ago from their mother. The current FMV is about $60,000.
This person never lived in the house. It is fairly certain
that her mother's adjusted basis at the time of the gifting
was less than the FMV at that time.

If the property is sold:
1. Are the gains capital or ordinary?
2. What rate would the gains be taxed at? (person is in 10%
income tax bracket)
3. How do you figure the FMV 3 years ago?

TIA
 
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P

Paul Thomas, CPA

Buddy said:
A person received an acre house lot with a trailer 3 years
ago from their mother. The current FMV is about $60,000.
This person never lived in the house. It is fairly certain
that her mother's adjusted basis at the time of the gifting
was less than the FMV at that time.

If the property is sold:
1. Are the gains capital or ordinary?
Capital gains.
2. What rate would the gains be taxed at? (person is in 10%
income tax bracket)
It will be long-term capital gains, taxed at 5% or 15%.
3. How do you figure the FMV 3 years ago?
FMV three years ago is meaningless. Gifts carry the
original cost basis, so ask mom what her basis in the
property was, that's the basis when sold.
 
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S

Seth Breidbart

Buddy said:
A person received an acre house lot with a trailer 3 years
ago from their mother. The current FMV is about $60,000.
This person never lived in the house. It is fairly certain
that her mother's adjusted basis at the time of the gifting
was less than the FMV at that time.

If the property is sold:
1. Are the gains capital or ordinary?
Capital.

2. What rate would the gains be taxed at?
See Schedule D.
3. How do you figure the FMV 3 years ago?
It doesn't matter, the person received the property as a
gift, so the basis doesn't change. (If it was inherited
you'd need the FMV; I'd suggest either getting a retroactive
appraisal, or using tax records.)

Seth
 
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B

Bill

(e-mail address removed) (Buddy) posted:
A person received an acre house lot with a
trailer 3 years ago from their mother. The
current FMV is about $60,000. This person
never lived in the house. It is fairly certain that
her mother's adjusted basis at the time of the
gifting was less than the FMV at that time.
Above facts raise some other questions that would be
germaine. For example, who _did_ live in the "house"? Was
there rent paid? Such facts would affect the answers to your
questions.
If the property is sold:
1. Are the gains capital or ordinary?
Capital gains, since owned more than a year.
2. What rate would the gains be taxed at?
(person is in 10% =A0 income tax bracket)
The gains might start being taxed at 5%, but as the total is
added to other income, the next rate step for capital gains
is 15% (and no more than that, under current law). BUT:
Answers to questions above might impact, since rental income
could create depreciation and "recapture" issues.
3. How do you figure the FMV 3 years ago?
You might get assistance from a local realtor.

However, considering the kinds of questions you are posing
and the situation you describe, I would strongly recommend
you seek professional advice.

Bill
 
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A

Arthur Kamlet

Capital gains.
It will be long-term capital gains, taxed at 5% or 15%.
FMV three years ago is meaningless. Gifts carry the
original cost basis, so ask mom what her basis in the
property was, that's the basis when sold.
This is a trailer situated on a lot.

It has been my experience that in a number of cases,
trailers become less valued over time, and if not kept up
well, could even become a white elephant.

And this one was given away.

Now you could be right and the trailer could have gone way
up in value. And if so, I agree with your note.

But if the value of the trailer went down, then it is
important to know the FMV on date of gift. That value will
be used to claculate the loss, if any, on sale.

__
Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH
 
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