@Joacchim wrote:
Took your advice and talked to someone local we found from your link to NAEA.org. 1st thing we found out was that since my mother in law lived in the house for 2 of the 5 years before it was sold, no cap gains tax are due. Applicable section of tax code is section 121, fyi.
Whoops, wrong local professional. Try someone else.
Section 121 would definitely not apply unless your mother-in-law sold the house while she was alive.
When she died, the house became part of her estate and, as such, her estate received a basis that was stepped-up to the property's fair market value on the date of her date, per Section 1014.
