My sister passed away in August 2007. We hired a lawyer to settle her estate. The state is NY. She had 2 assets that were of any real value
- A brokerage account (around $ 200,000), and a house she bought in
2001. The brokerage account was a TOD (transfer on death) the benefieciaries were 50 % me, 50 % my father (she wasn't married). She did not have a will. The lawyer asked us to open up an estate acccount (we did). We sold the home in February of 2008 for 215,000. The house was estimated at 215,000 - 225,000 around Ocober of 2007 when we had some real estate agents come look at it. The proceeds of the house less the mortage went into the estate account. My question is...how much tax do we on the sale of the house? Don't we use the "step up value method" My understanding from th IRS website is was we use the FMV of the house at the time of death. the IRS publications are confusing to say the least....then I read somewhere that I use the value my sister paid for the house back in 2001+ improvements to arrive at FMV.. so what I'm asking is what value do I use for the purpose of the fiduciary return and tax purposes? of course FMV at time of death would amount to a fraction of the tax as opposed to paying tax on the price she paid + improvements. Thanks in advance.