Capital Gains Issue

In 1961, my parents bought their house. In 1993, my father passed away. In 1996, my mother quit claim half the house to me to avoid probate. At the time, I was living there and paying the bills. In 1999, I moved out and bought my own home. Soon after, my brother moved back with her and also helped her with the bills. Recently, he has bought own home. She is 73, and can not afford to live there on her own (already she has not paid the property taxes). She would like to sell the house and add an apartment onto my house.

Since she does not have much money, it's very important that we handle the sale of her house carefully. I like for her to keep as much as possible from the sale for her care in the near and far future.

I know that her half of the sale will be free from Capital Gains tax. But it's my half that I am questioning. I went to an Elder-Law attorney who spoke with a CPA. According to them I would not be subjected to capital gains if the property was transferred as a convenience, not intending to convey the property, but basically to avoid probate. If the transfer was made as a convenience as opposed to an actual transfer, the IRS may interpret the transfer as a transfer for convenience therefore the property was never vested to me. If transferred to me as a convenience rather then a transfer of equity, Capital Gains would not be counted for my half of the house.

Before I got this opinion, I talked with my CPA asking if I could qualify for some kind of exclusion on Capital Gains. She said "no". I'd like a third opinion. What do you think of all this?

Sincerely,

Angela