Life Estate Filing Expert Help please.......

[gettindone]

Seeking advice on how to properly report/file pertaining to sale of Life Estate Home. I see otheres with similar questions but not quite same situation. Have called 6 CPA's seeking help but they are all too busy. I see many professionals on here are knowledgable and hoping they can assist us in this.......
Here are the details;

Parents purchased home in 1994 for $162,500

One parent died in 2016...

Son and daughter in law moved in and new deed filed stating $100.00 purchase price reserving Life Estate for remaining parent in 2017...
All in agreement sold home and moved in 2023...

Son and Daughter in law each received form 1099-S splitting the sales price between the 2 of them...

Assuming this to be entered under "Sale of home" as it was primary home for tenant, son and daughter in law since 2017.

No capital Improvements were made only minor updates, repairs and maintenance.

If this is to be reported under sale of home, which date should be used for "date bought or acquired"? the date parents purchased the home in 1994 or the date the Life Estate Deed was filed in 2017?

If 2017, how is the cost basis calculated?

Thank you in advance for expert guidance.........

[M-MTax · Accepted solution]

Aware that you want "expert help" but you need to understand that life estates and remainders need to be valued using IRS actuarial tables and if you look at the info at the link it's complicated.

IRS Actuarial tables 

No matter what your basis would be whatever your remainder was worth in 2017 and that would be based on the actuarial tables. Something else is a gift tax return should have been filed in 2017 when you got your remainder interest.......there's no annual gift tax exclusion because a remainder is a future interest.

The sales price would also be divided between the life tenant and remaindermen according to the actuarial tables which would be different than the 2017 values.

So this is really something that you need to get a face-to-face meeting with a tax pro for because it's a very involved matter.

[gettindone]

Thank you.......