I don't know what state your mom resided in, but for this specific property it could matter, because FL is not a community property state. The community property states are Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin. I am going to assume your mom did not live in any of those states when she passed. Now I'm going to use some arbitrary numbers here, because there's apparently something that everyone involved in this on your end, does not understand.
"Who is this “estate” that is supposed to sort out the Form 1041 and K-1 amounts?"
When a person dies and that person has assets (real estate *is* an asset) weather they have a will or not, all of the deceased person's asset have to go through a legal process called "probate". One key part of the probate process is the "legal" appointment and/or recognition of someone who is legally responsible for the assets of the deceased. That person is referred to as the administrator of the estate. No will is necessary for this process - but it does make it a lot easier, less costly and avoids any arguments or misunderstandings by the beneficiaries of the estate of the deceased.
The administrator is legally responsible for establishing an estate and obtaining an EIN (Employer Identification Number) from the IRS, for that estate. Then all of the assets of the deceased are transferred to the estate. With real estate, that means that real estate is deeded from the deceased, to the estate of the deceased. From there, all outstanding debts of the deceased are paid from the estate. Then any remaining assets/money left are distributed to the benificiaries as dictated by the will, or by state law if there is no will.
Your case while not that complicated, isn't exactly that simple either. So let me pick some arbitrary numbers to help you understand this.
- Mom and dad purchased FL property in 1985 (or thereabouts) for $50,000. Both of their names (and only their names) were on the deed as JTWROS (Joint Tenancy With Right Of Survivorship). Theefore each had 50% ownership with a value of $25,000 for each of them.
- When dad passed in 1987 the FMV (Fair Market Value) of the propery on the date dad passed was $60,000. So dad left mom his 50%, and on the day of his passing, his 50% was worth $30K. So mom's new cost basis on the property was $55K. She got a "step up" in cost basis of the FMV of dad's 50% on the day dad passed away.
Now, before I can go any further, I need to know when you and your 2 sisters were added to the deed. Before dad passed? Or after? This matters, because it has a "huge" impact on the ownership percentage and cost basis for everyone.
