Can i increase the basis of an inherited property by improvements made while still within an open estate?

[Dad1]

I understand my basis in the property is the FMV on the DOD (and gains are all LT), but I've put over $50k of estate funds and some of my own funds into this property to restore it to market condition since the DOD. Can the FMV on DOD be adjusted by this amount for purposes of determining the amount of the LT capital gain? Is there any benefit of selling the property within the state (prior to estate closure) versus selling it after it is deeded to me? I would like to get the court off my back and just have closed, but don't want to endure any unintended tax consequences. I anticipate a gain in the sale of the property as it was run down and unsaleable at the time of death and the appraisal.

[RichardG]

The cost of repairs and improvements after the owner's death can be added to the basis of the property.  Property distributed from an estate to its heirs retains its basis, so that number will be the same whether the house is sold inside the estate or distributed to the heirs and then sold.

Due to the compressed tax brackets for trusts and estates and state income and principal laws, it's possible that selling the house from the estate could be more costly than a sale post distribution.  At the very least, it's safe to say there are no adverse tax consequences to distributing the house to the heirs who then sell the property.  You can follow this link for a thorough discussion of this point.  http://www.journalofaccountancy.com/issues/2014/apr/trusts-estate-planning-20138750.html