I inherited rental real estate property from an uncle that past away 7 years ago. I just now received it because his will gave a life estate to his wife for the income from the property during her life. He owned the property as separate property. She has now passed away and I have received the property.

At what time do I value the property? At the time of his death or his wife's death?

What I have read says that I value it at the time of his death. I called the IRS and they said that I value it at the time of her death.

I would like to value it at the time of her death, but I would like the IRS reg that says that I can do this.

Mdharding:

Given that up to 60% of responses to tax questions from the public are answered incorrectly, you cannot depend on a verbal opinion from the IRS on this issue. If you get that opinion in writing, then you can use it.

If the property is addressed in your aunt's will, then I would feel better about using her death date as the basis date. If not, I would default to your uncle's death date.

This issue screams for professional tax representation. I recommend you give an enrolled agent a call. You can find a local EA from www.naea.com.