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Life Estate - 1099S - Proper way to record
Hi,
My mother had her home in a Life Estate, with me and my 2 other siblings as Joint Tenants with Rights of Survivorship. My questions is how do I properly record this in TurboTax? Some points of note:
On the date of inheritance, the fair market value was $385k. We sold the property not too long afterwards for the same amount, 385k. The proceeds from the sale were 128k after paying closing costs, reverse mortgage company, etc. We each received a 1099-S form listing the total gross proceeds of 128k. I would have expected that form to just show my 1/3 which would have been about 42k, but that's not what I'm seeing. So in TurboTax, do I just list the investment type as "other", and select "inheritance" with the fair market value of 385k and the net profit of 42k (my 1/3 payment)? Also, would I categorize it as a non-investment property for personal use, which would record the sale as a $0 loss?
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Thanks!
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--So, yes, 1/3 of the gain figure goes in the net proceeds box.
--Is $385k the total price? If so, just enter 1/3 of that for your share ($128,333) for the fair market value of the property when your mother passed away.
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If your mother has passed away you get a full step up in basis to the fair Market Value of the property on the date of your mothers passing. So your basis & sale price are both $385,000 and you do not have long term capital gains. So no taxes due.
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My situation is very similar to the one I am commenting on.
If you have a stepped up basis and sell very soon after death, I think you could actually have a loss which you could report up to $3000 in the year sold.
Stepped up basis $385K
Sold for $385K less some fees (ie $365,000)
So how again is this reported to the IRS using Turbo Tax?
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@juva: Here are the steps to report in TurboTax, as outlined by Irene S in an earlier post:
- Click on Federal Taxes > Wages & Income [In TT Self-Employed: Personal > Personal Income > I'll choose what I work on].
- In the Investment Income section click on the Start/Revisit box next to Stocks, Mutual Funds, Bonds, Other. [See Screenshot #1, below.]
- If you have already entered some investment sales, you will see a screen Here's the investment sales info we have so far. Click on the Add More Sales link. [Screenshot #2]
- If you haven't already entered some investment sales, you will see a screen Did you sell any investments in 2016? Click the Yes box.
- On the screen, Choose the type of investment you sold, mark the button for Everything Else and click Continue. [Screenshot #3]
- On the next screen, enter the sale information. Be sure to enter the net proceeds and mark whether income taxes were withheld or not. [Screenshot #4]
- Continue through the screens, entering the requested information.
If this information does not address all your questions, please respond to this answer string with additional information.
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HI - I am using TT Home and Business for Windows 2020. When I select, as per #3 above "Add More Sales", the next screen asks if I received a 1099B, If I select NO, the next screen says "tell us about this sale". Then is asks questions only about the dates, cost and proceeds. Is this the same screen? There is no such "everything else" option. Is the installed version of TurboTax different? What should I select? Thanks
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The screen that you are showing is what you would use to enter the data for a sale that was recorded on a 1099-S.The form has changed slightly since the prior tax year. If you sold a house, you would enter the information on the page that you are showing. This information would flow to Form 8949 and Schedule D.
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