You are correct. Proceeds from the sale of real estate should be reported on a form 1099-S (extracts below). Each of you should get a form 1099-S showing your shares of the proceeds. You would then report the 1099-S in the "Investments" section in TurboTax. You would enter your cost basis as your share of the fair market value on the date death. There will likely be little, if any, taxable gain.
The issuer of the 1099-Misc should issue a corrected 1099-Misc to zero in box 3. Then prepare and issue a 1099-S to properly report the transaction. Refer the issuer to Section I in this 1099 General Instruction, Error Type 2, for the steps to make the correction.
Form 1099-S Instructions:
"File Form 1099-S, Proceeds From Real Estate Transactions, to report the sale or exchange of real estate."
"...you are required to report a transaction that consists in whole or in part of the sale or exchange for money, indebtedness, property, or services of any present or future ownership interest in any of the following.
- Improved or unimproved land, including air space.
- Inherently permanent structures, including any residential, commercial, or industrial building.
- A condominium unit and its appurtenant fixtures and common elements, including land.
- Stock in a cooperative housing corporation (as defined in section 216).
- Any non-contingent interest in standing timber.
Sale or exchange.
A sale or exchange includes any transaction properly treated as a sale or exchange for federal income tax purposes, even if the transaction is not currently taxable."
"...the person responsible for closing the transaction, as explained ... below, is required to file Form 1099-S.
If you are the person responsible for closing the transaction, you must file Form 1099-S.
...
If the Closing Disclosure is not used, or no settlement agent is listed, the person responsible for closing the transaction is the person who prepares a Closing Disclosure that identifies the transferor and transferee, reasonably identifies the real estate transferred, and describes how the proceeds are to be or were disbursed."
@WhoDatFan
[edited 3/11/2024 7:10AM PDT]
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