An executor does not inherit any property from the decedent unless they are one of the beneficiaries. If the estate sold the home then the capital gain or loss will be distributed to the beneficiaries on their individual Form 1041-K1s.
Any asset in the estate is considered inherited property (not income). Only income from the inherited property becomes income to the beneficiaries. There are no gifts involved.
If the inherited home was transferred into the name of one or more of the beneficiaries after death, and it is inherited by all beneficiaries, then the sale itself is reported on the return of each beneficiary (without the use of the Form 1041-K1 for the sale). Each beneficiary will report only their share of the sale. Follow the instructions provided by our Tax Experts @ColeenD3 and @DawnC.
As noted, all inherited property is considered held long term so it's important to use a purchase date of 'Various' or select 'Inherited' property depending on whether you are using TurboTax Online or TurboTax CD/Download.
If there are any other earnings from the estate before other assets were transferred, such as interest on a bank account, then the estate return will provide a Form 1041-K1 to each beneficiary.
@TaxSeaMacKodiakAK
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