My dad passed away a couple years ago and left our family home to my mom, my two siblings, and to myself. The home has been distributed/title has been transferred from the trust to the four of us as beneficiaries. My mom and I are in the process of refinancing to pay off the existing reverse mortgage as well as buying out my siblings. We have agreed the current FMV is the same as the date of death value, so there should be no gain or loss for either of my siblings. However, the 1099-S each sibling will receive will be the amount paid to each (after the reverse mortgage has been paid off) rather than their actual share of value. Therefore, if they report their 1099-S, it will appear as though there is a loss when there is none.
How can they correctly report their cost basis and share of value at the sale if their 1099-S does not match? Additionally, the home is not the primary residence of either sibling who is selling their share.
