Such a sale would be viewed as part gift and part sale by the IRS which would most likely require you to file a gift tax return (though it is doubtful that you would pay any tax).
The state may also require you to pay additional transfer taxes based on their estimate of the value of the property.
There would also be a lower basis in the land which would increase her gain when she sold the property.
Often there are ways to minimize tax consequences with some simple planning. Feel free to contact me, but if not, I recommend that you contact another tax attorney.
