All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

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Valued Pioneer
Posts: 4
Registered: ‎04-17-2017

Inheritance Property Sale Proceeds

Gross Proceeds listed in box 2 of a 1099-S received as a result of selling a prorated interest in inherited property, does this need to be included in income..?  This was a situation where property had to be liquated/sold in order to realize the inheritance (which was a prorated interest in real estate) since only a portion (50%) of the ownership of the property was being inherited.  The total sales price of the property was much less than $5.4M, was less than $400k.

 

If this must be reported as income, what form should be used..?  

Council Member
Posts: 508
Registered: ‎04-06-2016

Re: Inheritance Property Sale Proceeds

Did you inherit the property, or was the property sold by the estate and you inherited the money? 

 

If you inherited the property and then sold it, you get a step-up in basis on the day you inherited it and then would need to pay taxes on any gain between that point and the day it was sold.  The estate would have been responsible for paying taxes on the gain in value of the property between the decedent's basis and the basis on the day you inherited it.   This sounds like the case if you received a 1099-S in your name.  

 

If the estate sold the property and then gave you the money. You don't need to report it on your taxes.

 

If you need to report it, in the online software it'll go: Federal> Income> Sales and Transfers> 1099-S Sale of other real estate, collectibles, and other investment property .

 

Karen 

Valued Pioneer
Posts: 4
Registered: ‎04-17-2017

Re: Inheritance Property Sale Proceeds

Thanks so much for the info.

 

Silly to say, but I'm not really sue...it all was handled by the attorney's office, the real estate agent, and the title company. A succession was done as part of all this and so I'd say the property was sold by the estate and the money was allocated out to the 3 kids and Dad, with 50% going to Dad (his ownership share) and 50% being inherited by us 3 kids. Mom died in 1996 but succession was never done, until the property sale last year. In order to sell the property, succession had to be done.

 

In any case, if I understand correctly, you're saying...

 (a) - if the Estate sold the property and sent me a check (one third of 50%), then simply

         ignore the 1099-S received, i.e. omit this from my income on the 2017 return,

                BUT

 (b) - if I inherited the property interest and then, together with my siblings and Dad, sold

         the property, I need to pay tax on the gain (if any), and in this case, the gain calculation

         involves the FMV of the property on the date of Mom's passing (Jan-1996), which I take

         it is the "step-up basis" thing.

 

Is this correct..?   If so, and if the (b) scenario above is the case, is there an easy way to estimate the FMV of the property way back in Jan 1996..?