Thank you, Opus, for your thoughtful reply.
RE: #6 - Can you clarify? If the $26,500 were treated as a FMV, if I add the $31,000 (which was legitimately all improvements according to IRS guidelines), wouldn't the basis be $57,500? Not sure how the $8,833, $3,000, or $5,833 for each sibling factor into the basis - but good to know for the gift aspect of the situation. (Sorry if I am overlooking something obvious.)
Also, my single sister and married brother (with his wife's blessing) willingly signed over their rights to ownership of the house to me, which was a requirement of my ability to use the Small Estate Affidavit, so they legally relinquished their rights. Neither of them was willing to play an active part in the situation.
The buying price of $26,500 was a distressed sale and would have gone through had that buyer not tried to scam me and sell it to two different parities and take off with the proceeds of both sales. (He was one of those "I'll pay cash for your house" buyers.)
Before I agreed to sell it to him, I worked through a realtor who was going to price the house at $57,000. I expect it might have sold for a lower price, if it did sell. My siblings and I live between 1,800 and 2,700 miles from that home many states away, so was all agreed to take the distressed price to make a fast sale. (The buyer promised a fast sale but then he went the scammer route.)
Thank you, again, for your explicit and specific points.
