@dvdgarofalo wrote:
Do you know, would I need an appraisal? Or is a CMA from a real estate agent sufficient?
Whether you need an appraisal depends on how demanding the IRS auditor is if the tax return is audited. How reliable is your CMA for 12 years ago? I usually recommend a retroactive appraisal by a certified appraiser. It's a lot easier to defend in an audit. But considering the relatively small amount of money involved, your client might not want to pay for an appraisal.
Then there's that other 1%. Technically the owner's basis now is 99% of the value on the parent's date of death, plus his own basis in the 1% that he owned before the parent died. That depends on how he acquired that 1% interest. Did he pay for it? Was it a gift? But again, 1% of a $60,000 home is so little that it's almost not worth worrying about.
You haven't said what the son did with the property for the last 12 years. Has he been living there? That will determine his eligibility for the Section 121 exclusion of gain. If he rented it out at any time, that adds some complications.
There's one other complication, since the parent died in 2010. You need to know whether the parent's executor made a Section 1022 election. This was available only for decedents who died in 2010. If the executor made a Section 1022 election, the son's basis is determined differently, and there is no stepped-up basis. For details see IRS Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010.
