How to report a 1099-s on a 1041

[pmgp6q]

I received a 1099-s for the sale of my dads house of $270,000 and not sure how to report it in the 1041 form for his estate taxes.

Thanks

[M-MTax]

Report it on form 8949 and schedule D.

[Cynthiad66]

Also, sale of real estate for a decedent is typically reported on Form 1041 by the Estate and then carried through the 1041 K-1 to beneficiaries to report on their personal 1040 returns based on their allocation of the sale.

 If the residence was not used as a personal residence, it must be reported as a capital gain or loss on Form 1041 of Schedule D.

@pmgp6q

[pmgp6q]

Thanks, Can deduct the $250,000 allowance under normal 1099-s?

[KrisD15]

No, but you step-up the basis of the house to the value on date of death to figure the capital gain if any. 

[wtflanders]

I also received a 1099-S for the sale of decedent's primary residence and have reported it on Form 8949 Schedule D, but where do your report the non-taxable proceeds on the K-1's?

The only thing I can find is in box 14C, but the description of this type of distribution does not align.

Note:  There was no capital gain on the sale of the house. 

Thanks.

[RobertB4444]

Form 1041 does not have a process for reporting non-taxable distributions from estates to beneficiaries.  The form is only used to report transactions that may or may not be taxable.  Distributions of previously taxed income are not reported.

@wtflanders 

[wtflanders]

So I can ignore the 1099-S on the 1041?

[RobertB4444]

No, absolutely not.  The 1099-S is reporting the sale of the property.  The IRS has no way of knowing that that sale was not taxable unless you report it.  So you need to enter the sale of the property on form 8949 and show that the sale was non-taxable due to the step-up in basis.  

The part that you don't have to report on the 1041 is the distribution of already taxed funds to the heirs.   That they aren't interested in as long as it is done in accordance with the terms of the will.

@wtflanders 

[wtflanders]

That's what I thought, just wanted to clarify.  I have entered the 1099-S and shown the stepped up basis and how most of the funds from the sale of the home have been distributed to the beneficiaries.   Some of funds have been held back to pay additional trust expenses as they come up.