Hi All,
I recently learned that my mother in law is having tax issues. I have her convinced to see a professional but it's going to take a few weeks (she's visiting on vacation).
She lives in her own home with a mild mortgage in Maryland. Five years ago, she jointly (1/3 share) bought a second home in West Virginia. She owns it with her nephew and his wife. The each may spend a month there a year total. All three are on the title (Tenants in Common, I think) and all are on the mortgage. The WV house is never rented out.
For the past five years, she has been writing a check to the couple for her share of the mortgage payment. She has been deducting the 1/3 prorated amount of the interest on the cabin (as well as the regular mortgage) from her taxes. Her nephew has been claiming their 2/3 share on his taxes.
The IRS is calling foul and saying the deductions aren't documented enough. She doesn't have more detail than that and the paperwork isn't accessible for a couple weeks. She wouldn't say outright, but I think she's been told she's on the hook for $15K including penalties, etc.
Any perspective of how much trouble mom-in-law is in?
Thanks, G