Selling parents house co-owned by me and sibling

[bbschulz77]

My mother, sister and I co-owned my mothers house and inherited mom's portion after mom passed, how do I calculate taxable income on the sale of the house

[M-MTax]

You might be able to use the FMV on the date of death (i.e, step-up basis) if you can show your mother retained a life estate (this would be an implied life estate).

See https://www.law.cornell.edu/cfr/text/26/20.2036-1

An implied life estate (which is the result you want) is dependent upon the circumstances of the transfer and the grantor of the deed.

[M-MTax]

The facts and circumstances are set forth below are taken into consideration as to whether a life estate could be implied.

1) The transfer is to a family member, most typically from a parent to a child.

2) The transferor (again generally a parent) is elderly and continues to reside on the property usually until death.

3) There is some sort of understand between the parties as to the arrangement under examination.

4) The transferor, while continuing to reside on the property, pays most or all of the expenses (e.g., property taxes, utilities, mortgage interest (if any), repairs and maintenance).

5) The property is being used as the transferor's primary residence.

6) The property is sold by those formerly with a remainder interest within a short time period after death of the (implied) life tenant.