Our mother passed 09, 2021

[hyaduckh]

Executor took care of the sale and divided the money evenly. No increase in value over the two months. We live in Georgia.

[Anonymous_]

I am sorry for your loss.

Do you have a question?

Did the executor file a Form 1041 for an estate or trust?

Did you receive a K-1, 1099-S, or other tax reporting statement for the sale?

[hyaduckh]

Hello tagteam and thank you for your kind words. I don't know what happened to the question but I will try to explain. Our mother has a will that left the house to the three of us to be divided equally. She died in September, 2021 and we had to wait for probate (I hope that is the correct word) to clear before we could list the house. We sold the house in November 2021. It was an inheritance and the son was named executor of the will. He listed the house with a realtor, he paid the taxes, he took care of everything. All three of us had to sign the papers to sell the house to the buyer and after the sale the son divided the money up between us evenly. I keep reading that in the state of Georgia there is no inheritance tax and you do not have to pay tax unless you make over 11.7 million dollars. We got an appraisal and sold the house for a little less than the appraisal so no profit was made on the house. We have not received any forms or anything from the IRS or state of Ga. According to what I read it talks like we do not need to report anything to the sate or the IRS but the IRS part is unclear to me. I am about to start my taxes and I want to be clear on the sale of the inherited house which sold for $272,000 and divided three ways. Thank you!  

[Anonymous_]

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@hyaduckh wrote:

.....you do not have to pay tax unless you make over 11.7 million dollars.

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That figure would be applicable to estate tax, not estate (or individual) income tax.

However, it appears as if there is a loss on the sale, so you might want to report that (as a capital loss) which can be used, at least in part, to offset other income.

[Anonymous_]

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@hyaduckh wrote:

.....we do not need to report anything to the sate or the IRS but the IRS part is unclear to me.

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If you receive a tax reporting statement (such as a 1099-S), you would have to report the sales proceeds and your basis to avoid an IRS mismatch.

[hyaduckh]

Thank you tagteam,

So if I don't receive a 1099-s does that mean I don't report it? From what I can tell only one person needs to file a 1099-s for the sale of the house and the son who was executor that handled everything will probably be the one who receives the 1099-s. Am I thinking correctly? If I do get a 1099-s I would just put down our share and list a $333.33 loss in capital gains as there was no increase in value from when we received the house and when we sold the house. Should I do that regardless of whether I get a 1099-s or not? 

Thank you again for taking the time to help us.

[Anonymous_]

Yes, you should report your share of the sales proceeds and your share of the basis (inherited, so it would be stepped up to fair market value). 

[hyaduckh]

Thank you! I have one more question. The seller had an independent appraisal done which is the figure we used and we sold it for $1000 less than her appraisal. Would that be the fair market value we use or is there someplace else to get the fair market value. I would think they would be the same but I don't know.

[Anonymous_]

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@hyaduckh wrote:

Would that be the fair market value we use or is there someplace else to get the fair market value.

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If the appraisal were done as a date of death appraisal, that would be what you would use for your basis.

[hyaduckh]

The appraisal was performed at the buyers request 2 months after her death. We did not think to get an appraisal at the time of death with the reading of the Will, funeral arrangements, burial, etc... I don't know of an accurate way to go back to the day of death and figure an appraisal. I can't imagine it would be much difference in the short 2 month period. The buyer had the appraisal done and we never did. So can we get an appraisal for the day she died or can we use the appraisal from the day it was appraised  and if not who do we contact to figure out this mess. Thank you again.

[Anonymous_]

A date of death appraisal would be optimum.

Are you certain the appraiser did not use the date of death for the appraisal?

[AmyC]

In the case of property distributed, sold, exchanged, or otherwise disposed of, within 6 months after the decedent's death such property shall be valued as of the date of distribution, sale, exchange, or other disposition.

26 US Code § 2032 - Alternate valuation

[Anonymous_]

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@AmyC wrote:

In the case of property distributed, sold, exchanged, or otherwise disposed of, within 6 months after the decedent's death such property shall be valued as of the date of distribution, sale, exchange, or other disposition.

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That is only applicable if the alternate valuation date results in a reduction in the value of the estate and a reduction in the amount of estate tax due.

Thus, the alternate valuation date is only (potentially) useful for large estates.

[hyaduckh]

Thank you both tagteam and AmyC,

In our case we were not the executor. We received funds from the executor for the sale of the house. I do not know if the house was every worth more and sold at a lower price as I doubt it as she had been living in the house a long time. As we did loose a little money from what it was appraised for and we are not talking about a lot of money I hate to pay someone to do our simple taxes but it looks like I need to find someone that can figure all this stuff out. Thank you both for taking the time to try and help me.

[AnnetteB6]

Taking a look at the conversation and your previous responses, it appears that your main question is whether the buyer's appraisal of the property that was inherited and sold can be used as the fair market value of the property as of the date of death.  

Since real estate prices may have been volatile in your area, my recommendation would be to contact a real estate appraiser or real estate agent and get their opinions on how the appraised value may have changed between the date of death and the date of the buyer's appraisal.  If the real estate market was fairly stable, there may not be much difference, if any.  

Document your research and efforts to determine the fair market value as of the date of death just in case the IRS questions your return.  

My condolences for your loss.  

@hyaduckh