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<< My wife received a 1/6th ownership in a family property 3-4 years ago.
The children just sold the southern california property (Jan 2000, aprox
$50k each). What tax laws apply to this situation (so she can pay as
little tax as possible)? >>

If the $50K is more than her basis, she will owe long-term capital gains tax (10% of her profit if you're in the 15% bracket, otherwise 20%, unless one of the special rules like depreciation recapture comes into play) on the difference between the $50K and her basis.

What is her basis? If the property was inherited it's the value (of her share) as of the date of death of the decedent. If it was a gift, it's (her share of) the donor's basis.

Phil Marti
Tax Preparer
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