Do you have aging parents that live in an appreciated home, but no longer reap any tax benefits from ownership? For example, their home is paid off and there is no mortgage interest deduction for them to deduct. By buying your parents’ home, and then rent it back to them at the going market rate, they would gain instant access to their home equity (without moving) and you’d pick up some generous tax deductions.

When a tax return is not filed, the IRS assesses a tax liability based upon a Substitute For Return (SFR). These SFRs are based simply on the reported income on W-2s, 1009s, etc. without any regard to possible deductions or cost basis issues.