Stepped up basis and capital gains exclusion

[bensongang]

Hello.  My mother in law sold a home in Oregon that she jointly owned with her now deceased husband within 2 years of his death.  My understanding is that she receives 50% of the stepped up basis AND the full $500K capital gains exclusion.  Turbo Tax Premier walks us through the steps but then only applies the $250K capital gains exclusion.  How come?

[KrisD15]

Yes, your understanding is correct as long as she did not remarry. 

If that is the case (she sold within 2 years and had not remarried) you can enter the stepped-up value as the "Adjusted Cost Basis" of the home and continue to see if the program then gives her the full 500,000.

On the "Home purchase info" screen select

"Yes, I will enter the amount"

Do not use "No, I would like some help top calculate it"

[bensongang]

Thanks for confirming my understanding.  I appreciate it.  And no, she hasn't remarried so is entitled, as you agree, to the full $500K