When you inherit property, the IRS applies what is known as a stepped-up cost basis. When you sell, you owe capital gains taxes only on any gains that the asset made since you inherited it.
Since you do not know the cost basis at the time you inherited it (and no real way of finding it out), you will have to pay capital gains on the entire proceeds as a long-tern investment - minus any sales fees of course.
Capital gains, losses, and 1099-B forms are all entered in the same place:
- Open or continue your return in TurboTax.
- Search for investment sales and then select the Jump to link in the search results.
- Answer Yes to the question Did you have investment income in 2023?
- If you land on the Your investments and savings screen, select Add investments.
- Follow the instructions and we'll calculate the gain or loss from the sale.
@docjth
[Edited 1/31/24 | 1:02PM CST]
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