Home sale

What is the name of your state (only U.S. law)? PA

I believe this belongs here, rather than the property section.

A married relative has moved her father in with her. She has 2 brothers, both of which have filed bankruptcy.

Father and daughter have a joint checking.

Father is selling his home, proceeds expected to be around $40K. Father will then gift 10K each to daughter, son in law, and 2 sons.

My understanding is there would be no tax for either the father on the proceeds (claim one time exemption on house sale) or the gifting, as well as no tax implication for any of the 4 receiving the gift. Is this correct?

To further complicate, the father's health is not good. Should he die soon after the sale/gift, are the gifts now seen as a method to circumvent any estate tax, and the 4 recipients now liable?

Thanks in advance

...(claim one time exemption on house sale)...

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There isn't a one time exemption any longer. But, if it was his primary residence and he owned it for 2 of the prior 5 years, then the first $250,000 of gain is not subject to federal income tax.

The federal requirement to report gifts is any gift to any one person in any one year in excess of $13,000.

Unless the father has a whole bunch more money, federal estate tax would not be a problem. For PA Inheritance Tax purposes, gifts made within one year of death are subject to the tax.

If he should require Medicaid assistance within 5 years of making the gifts, the gifts could result in a period of disqualification.