When a life estate is sold while the tenant and remainder man are still alive, what is the IRS form (preferably with Page # and section/paragraph) that discusses how to determine the adjusted cost basis.
For example, 2/3 of the sale went to the remainder man with 1/3 to the tenant. The tenant will not have any capital gains given she lived there 2 of the last 5 years. For all of the improvements over the 50-year life of the house, can the remainder man claim 100% of those or can he only account for 2/3? What about the expenses at the time of sale? Can the remainder man take 100% of those or can he only account for 2/3? Clearly the idea is to have the tenant not claim anything here since they will not pay any capital gains.
THanks.
