[WSBARP] A *complicated" Quitclaim Deed situation.

[Kary Krismer]

The reason I always mention step up in basis with CP issues is that 
quite frankly I'm not 100% sure of the results.  There are two issues 
I'm concerned about.

1.  If CP then the basis of the entire property steps up, not just the 
1/2 interest of the deceased spouse.  I'm not 100% certain that a QCD 
would change that result, because I'm not 100% sure a QCD actually 
changes the status of the property from CP to separate property.  Title 
is not necessarily determinate of CP status.  But if it did change that 
result that could be very bad. Arguably you'd go from 100% step up in 
basis to no step up in basis.

2.  There's also the issue of estate taxes.  I believe CP going to the 
surviving spouse is exempt from taxation, so I don't believe the 
transfer to the spouse prior to death helps with estate taxes (either 
federal or state).  What I don't know is whether the transfer might 
cause some adverse estate tax result.

Kary L. Krismer
206 723-2148

On 7/7/2021 9:01 AM, John J. Sullivan wrote:
> Oops. I meant the “former.”  Resident aliens are generally treated the 
> same as citizens for tax purposes. But capital assets inherited from 
> either generally receives a step up in basis (unless IRD).
>
> Thanks for the catch to Roger Hawkes. That’s what I get for 
> listserving on the iPhone before my coffee.
>
> John J. Sullivan
>