What do people think the daughter's basis is? See https://www.law.cornell.edu/cfr/text/26/1.1015-4
I am a little concerned about whether this could be 1) a partial-gift/partial sale transaction or 2) a sale followed by gift transaction. The difference is important. If a sale then it is a gain for you but your daughter has a higher basis.
What bothers me is the 1099-s/closing docs showing a $515k sales price. Especially if you ever had possession (even for a moment) of the whole amount of gain. On the other hand, the IRS doesn’t respect multiple transactions that try to hide the ultimate effect of something (the step-transaction doctrine) so perhaps here it is the ultimate effect that matters. A volunteer forum cannot answer that for you. That is a question for your own tax attorney, CPA, or enrolled agent.
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