Quit Claim deed and 1099-S

[user17546016839]

My 85 year old mother who is still alive set up her 4 children on a Quit Claim deed on her home of over 10 years.  We recently moved her to assisted living and at some point she may qualify for Medicaid.  Medicaid laws require that she retain 35.35 percent of the proceeds of her home.  The 4 children will have equal shares of the 64.65 percent.  She has a cost basis of $80,000 and a sale price of $120,000.00.  She will not incur taxes on her portion.  If this is a gift, do the children have to claim capital gains on their portion of the sale?

[Bsch4477 · Accepted solution]

You will incur capital gains income based on your pro rata share of the income from the sale. The basis is the same as the donor’s adjusted cost basis at the time of the gift.