After the passing of my mother a month ago, my sister and I were going through her paperwork and ran accross the document that conveyed my mother's home to my sister back in
1991. I told Mom that it should be a sale for a very low amount of money, but the attorney set it up as a gift to the daughter for the sum of $1, making it a legal contract. My questions to the group are: 1) when my sister passes, will the estate pay tax on the difference between the value of the home at the time of donation and the time of it's final sale, and is that subject to the one time exemption of profit on the sale of the home? and more importantly, 2) since the transfer is a gift, is the estate responsible for the gift tax due (based on the tax appriasal value) at the time of the transfer. What started me thinking about this is the basis value of the home to determine the profit subject to tax or exemption. Since my sister was given the house I'm guessing that the real estate value in 1991 would determine the starting basis for the gift tax and the profit from the sale. The home has a clause for a life estate in it for my mother, and since she passed away this year, what I'm concerned about is when the gift tax will be required to be paid. Hopefully, I outlined the problem well enough. Many thanks in advance...just getting info together to figure out what or where to go to help my sister....This ought to be fun! Best, Bob
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