" Since the initial sale of the property was $1.00 from mother to daughters and the mother has since died, what tax consequences will the seller have if it is sold for $45,000 to other sister"---> Actually, your aunts( your mom's sister) and your mom received the property as a gift( your grandma sold her daughters for $1) before she , your grandma, passed away. So the basis of the portion of the property for your aunt is the ORIGINAL COST, I mean the cost when she received it from her mom, NOT FMV at that time; it was a gift, not esate property. So,if she sells the portion of the property, then the amount of the LTCG will be; $45,000, FMV- the original cost; Assume that the original cost of the portion of the property was $5,000 and the current FMV is $45,000, as you said, then LTCG is $45,000-$5,000=$40,000;then your aunt is subject to her LTCG tax to both Federal( if her tax bracket is over 15%, then she shold pay 15% of the LTCG) and TN governments( she should 2.4% on her LTCG).
Last edited by Wnhough : 11-02-2010 at 03:10 AM.
Reason: to corfrect it