Basis step up on death of spouse in community property state
Hello,
Taxpaper, a widow and a California resident, sold primary residence in California, a community property state. My understanding is that in a community property state, the property got a "double step-up" in basis to fair market value as of the date of death of her husband. That is, the cost basis is adjusted to 100% of the FMV of the house (other than only 50% step up in other states).
How do I report the sale of the house in Turbotax, recognizing this issue? Say the married couple bought the house on 1/1/2000 for $200K, one spouse dies on 12/31/2019 (when FMV of 100% of house was $300K, and house is sold last year for $700K. Assuming for simplicity no additions for improvements, no selling costs, and no home sale exclusion, I understand the gain should be $400K ($700K - $400K).
Do I report the 12/31/2019 date as the "date bought or acquired" with $300K as the "original cost"? Or do I report the original date of purchase, and original cost, and somehow adjust the basis elsewhere in Turbotax?
