From: "joe.spam.weinstein@gmail.com" 
Newsgroups: misc.invest.financial-plan
Subject: Re: Home Residence Exclusion
Date: Tue, 12 Sep 2006 11:24:42 -0500
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HW "Skip" Weldon wrote:
> Question:
> Mom gifts house to daughter in 1997.  Mom (now age 87) still lives in
> house, but she is ill and a move to nursing home is imminent.  Mom has
> other assets to pay for long-term care.  Daughter wants to sell house.
>
> Daughter has just realized that she has Mom's tax basis.  She wants to
> give back to Mom so that they can use her residential exclusion
> ($250,000 tax-free gain for single.)
>
> While Mom has lived in house for requisite period, she has not owned
> the house since 1997.  Since my understanding is that she must BOTH
> own and live in the house for 2 of last 5 years, she does not meet the
> test and there is nothing to gain by transferring back to Mom unless
> she lives there 2 more years and rules don't change during that
> period.
>
> Does anyone disagree?
>
>
> -HW "Skip" Weldon
>  Columbia, SC

Hi Skip, no I don't disagree. The gifting was a costly mistake.
Joe Weinstein