Good point. The usual rule, for a gift, is that the recipient's basis is the giver's basis (what your mother paid for it). But there is an exception for the gift of her home, where she retained the right to live there ("life estate"). (see<a rel="nofollow" target="_blank" href="
http://www.njelderlawestateplanning.com/2010/02/articles/estate-and-inheritance-tax/life-estates-est...> which states in part "If you give away an asset and keep a life estate in that asset..... the cost basis of the house is "stepped-up" to the value of the house on date of death [IRC 2036]")
More info: <a rel="nofollow" target="_blank" href="
http://www.law.cornell.edu/cfr/text/26/20.2036-1">http://www.law.cornell.edu/cfr/text/26/20.2036-1</...>
