asked

My wife and I purchased our daughter's home from her at market value in 2016. My daughter and her family remained in the home, and they used the proceeds from the sale to build an addition for my wife and me. All mortgage payments have been made by all of us, and they were added back on title about 45 days after the sale. The IRS sent a notice asking why the sale was not reported on their 2016 1040. They had only lived in the house for one year. Is there any way this can be considered a non-sale since they never left the house, all proceeds were used for home improvement, and they are still on title with my wife and me?

August 29th, 2023

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