I'm responding to two of your questions here. First, let me clarify that UNDER NO CIRCUMSTANCES AND WITH NO EXCEPTIONS will you convert ANYTHING on this rental to personal use on your mother's tax return. There's no need, and it's an absolute waste of time.
How do I adjust her tax return to now show she no longer owns it?
On her tax return start working through the rental property. In the Property Profile section one of the screens has a selection on it for "I sold or otherwise disposed of this rental property in 2020" Select that option and continue working things through.
All rental income received by your mother in 2020 gets entered in the rental income section of her return.
All expenses incurred by your mother gets entered in the rental expenses section. She can only claim her share of those expenses incurred up to the date of the quit claim deed. (when her half was gifted to you)
Then you start working through each individual asset one at a time. You must do this for each individual asset listed in the Sale of Property/Assets section.
On the screen that asks "Did you stop using this asset in 2020?" select YES.
Enter the date the quit claim deed was recorded at the courthouse.
On the "Special Handling Required?" Screen, read all the small print on that screen so you will understand why I am telling you to select YES. Then click YES, and continue.
Finish working through that asset, then start working through the next asset in the list just like you did the previous one.
TAKE SPECIAL NOTE: If you have an asset for "financing fees" (or something similar) that gets handled a bit different. You should be able to figure it out as you work it through. If not, then help me to understand where you're confused or not sure, and I"ll assist you with 'getting it right".
. I guess I'll also have to have her file a form 709 git tax form seperatly.
Actually, it's the giver of the gift (your mother) and not the recipient (which is you) that is required to file the IRS Form 709. Now the name of that form can be misleading. Nobody will be "any" taxes on the gift. All your mother is doing by filing the 709, is meeting a legal requirement. That is all.
That 709 is mailed separately from your tax return, as it can not be e-filed and is not mailed to the same address as the tax return is (if you elect to mail the return). The actual mailing address for the 709 is in the instructions for completing the 709.
The form itself is at https://www.irs.gov/pub/irs-access/f709_accessible.pdf
Instructions are at https://www.irs.gov/pub/irs-pdf/i709.pdf and the mailing address is on the top left of page 5 of those instructions.
