There is nothing I've ever found in tax code saying original owner.

I have in fact seen the word owner only.

The cost basis is always bumped up to reduce tax liability.  That is the exact purpose from Congress.

Not once but every time.

Income received in trusts are taxed 

I disagree totally.  The assets cost basis is bumped up on the date of the owners death. 

That is Congress intent to limit liability.

I have only seen in tax code the word owner.

Some people think it's original owner.

What's the point of limiting the liability once. It also limits the amount you can right off as a loss.

Show me the code.

Absolutely wrong.  It is theFMV of the new owner

Tax code says owner not original.

The whole purpose from Congress  is to limit liability on the beneficiary.

What your saying is limiting it on the first beneficiary.  Again nothing in code states this.

Subject to interpretation. Be

You do not pay tax on the full amount that you received.  You pay tax only on any gain from the transaction.  The gain (or loss) is calculated by subtracting your net proceeds from the Fair Market Value (FMV) of the property.

The FMV that you will use is the value of the property on the date that you received it (if it was transferred prior to her death, as a gift) or the date of your mother's death (if inherited.)  

You should contact a real estate professional for some guidance in determining the approximate value.  Once you have determined the FMV, here is how you will report the sale in TurboTax:

1. Login to TurboTax.com
2. Click on Wages & Income (you may need to first click on "Take me to my return" or "Pick up where you left off."  
3. Scroll down to the section Investment Income.
4. Click on Show More.
5. Click Start beside Stocks, Mutual Funds, Bonds, Other.
6. Indicate that you did not receive a 1099-B.
7. Proceed through this section of the program selecting Second Home when asked What type of investment did you sell?  
8. Enter the data requested by TurboTax (report only your share of the proceeds and an equal portion of the basis).

If there is a loss on the property, it will not be deductible.

Please accept my condolences on the loss of your mother.

My 3 siblings and I inherited unimproved property in 1989. We just sold it this year.  The property is definitely worth more now than it was in 1989.  

What would you recommend as the best way to determine the FMV?

To be clear, the property was bought several years before we inherited it. So the amount paid for it is probably not the same as the value when inherited.

The basis of property inherited from a decedent is generally the fair market value (FMV) of the property on the date of the decedent's death.  For information on the FMV of inherited property on the date of the decedent’s death, contact the executor of the decedent’s estate. You could also use the property tax assessment for 1989 (which is usually inaccurate) or contact a historical property appraiser.

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@catbill wrote:

What would you recommend as the best way to determine the FMV?

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Secure the services of a qualified appraiser, if you want to take the most conservative approach.

A qualified appraiser, in the case of real estate appraisals, is generally an appraiser who is licensed or certified for the type of property being appraised in the state in which the property is located.

Thank you for such a quick response.

Unfortunately, the executor would not have known the FMV and in any case is no longer alive. 

It has been suggested that we ask a realtor to prepare a statement that estimates the value of the property in 1989. I don't know what might be involved. What do you think about that?

The tax assessor's office may have records of what they valued the property to be. Some places list every home for years, you may get lucky with an online search.

A realtor could locate records of sales in the area possibly.

Any neighbors that were there could give a letter of the value of their house.

It is  recommended an appraisal be done within 6 months of the passing. You might be able to find an appraisers office that did it or could possible give  you a rough idea based on other appraisals in that area at that time.

If the IRS conducts an audit, they will want to see how you made a reasonable decision for the basis listed on the tax return.

@catbill

FMV $ 290,122 bought out my brother for $ 150,000 and replaced roof for $ 8,500.   Do I total this as $ 448,622 and that is what I put on the tax form as total Value?

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@carltoons wrote:

FMV $ 290,122 bought out my brother for $ 150,000 and replaced roof for $ 8,500.   Do I total this as $ 448,622 and that is what I put on the tax form as total Value?

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If you and your brother each inherited one-half, then you use half of the FMV on the date of death for your share, plus the $150,000 you paid your brother for his share (assuming that was FMV and not a bargain sale), plus the $8,500 you paid for the roof (as an improvement). 

Yes

Parents had the property placed in a trust in 1995.

Both parents passed in 2001.

Property sold 2019.

How do I find the value of the property at the time of their passing.

How is the capital gains calulated if any?

What form to use on the tax return?

How best to proceed?

You should have valued the property when it was inherited. 

If you did not, you will need to make that appraised value now. You might ask for help from a real estate professional. 

Next, enter the 1099-S that you should have received from closing on the property into the TurboTax program. 

Enter the 2001 value. 

If this was used as a rental, you would report the sale on your Schedule E.