You need to get some professional advice here.
There are a number of issues in regards to your transaction:
- Did you consult with an attorney and properly transfer title?
- You most likely have a gift tax return to file
- If you have suspended passive activity losses, those losses will get added to the basis of the property.
- You can't just flip flop between who is going to be reporting the activity. There needs to be an actual legal transfer.
- Consult a professional ASAP before you have tax consequences that are unfavorable to you.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
