[WSBARP] Stepped up basis

[Eric Nelsen]

Heather, doesn’t JTWROS mandate equal ownership, as one of the “four unities”? So that adding Woman to title, even as an EP tool, would necessitate an inter vivos gift of 50% of equity, leaving Man with only 50% ownership at time of death. Or does the IRS treat it differently?

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Heather de Vrieze
Sent: Tuesday, September 17, 2024 11:48 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Stepped up basis

The portion of the property that would receive a basis adjustment is directly related to the portion owned by the decedent.

If in your example the Man had purchased the property and added the Woman to title as JTWROS as an estate planning tool, then 100% of the property would be included in the estate of the Man who died (for estate tax purposes) and would receive a basis adjustment.

If the property were purchased jointly and they had contributed to it equally, 50% would receive a basis adjustment.

From IRS pub 551
Property Held by Surviving Tenant
The following example explains the rule for the basis of property held by a surviving tenant in joint tenancy or tenancy by the entirety.
Example.

John and Jim owned, as joint tenants with right of survivorship, business property purchased for $30,000. John furnished two-thirds of the purchase price and Jim furnished one-third. Depreciation deductions allowed before John's death were $12,000. Under local law, each had a half interest in the income from the property. At the date of John's death, the property had an FMV of $60,000, two-thirds of which is includible in John's estate. Jim’s basis in the property at the date of John's death is figured as follows:
Interest Jim bought with his own funds—1/3 of $30,000 cost
$10,000

Interest Jim received on John's death—2/3 of $60,000 FMV
40,000
$50,000
Minus: ½ of $12,000 depreciation before John's death
6,000
Jim's basis at the date of John's death
$44,000
If Jim hadn't contributed any part of the purchase price, Jim’s basis at the date of John's death would be $54,000. This is figured by subtracting from the $60,000 FMV the $6,000 depreciation allocated to Jim's half interest before the date of death.
If under local law Jim had no interest in the income from the property and contributed no part of the purchase price, Jim’s basis at John's death would be $60,000, the FMV of the property.

Heather

Heather S. de Vrieze
Attorney-at-Law
[cid:image001.jpg at 01DB08FA.056AC090]
3909 California Avenue SW
Seattle, WA 98116-3705
(206)938-5500
heatherd at westseattlelaw.com<mailto:heatherd at westseattlelaw.com>
www.westseattlelaw.com<http://www.westseattlelaw.com/>

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From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Eric Nelsen
Sent: Tuesday, September 17, 2024 10:10 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: Re: [WSBARP] Stepped up basis

Please post responses to list!

My guess based on logic (“logic” = a way of doing things wrong, but with confidence): There is a step-up in basis only as to the decedent’s interest. By definition, JTWROS interests are equal, so the basis on his 50% interest is stepped up, but her 50% is not. I have no IRS regulation or statutory cite to back this up.

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Douglas Scott
Sent: Tuesday, September 17, 2024 9:51 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: [WSBARP] Stepped up basis

Unmarried (non-marital union) couple owned real estate as joint tenants with the right of survivorship.  Man dies and the woman gets the property.  Is there a stepped up basis for the woman?

DOUGLAS W. SCOTT
Rainier Legal Advocates|LLC

465 Rainier Blvd. N., Suite C
Issaquah, Washington 98027
425.392.8550 (tel)
425.392.2829 (fax)



www.rainieradvocates.com<http://www.rainieradvocates.com/>


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