Deductions & credits

This does need to be reported on your tax return and also on the returns of the other four of your siblings, if that is who you mean by the 5 of us. 

The 1099-S is divided five ways using the nominee process. You would create substitute 1099-S forms to give to the other recipients of the proceeds.

If you received one Form 1099-S for the full amount of the sale, then you may want to nominee half to the person whose social security number is not listed on the form.

Nominee returns. 

Generally, if you receive a Form 1099 for amounts that actually belong to another person or entity, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received).  You must also furnish a Form 1099 to each of the other owners. 

File the new Form 1099 with Form 1096 (this is a transmittal for the 1099) by mailing to the Internal Revenue Service Center for your area. (Provided on the Form 1096)

• On each new Form 1099, list yourself as the payer and the other owner, as the recipient. On Form 1096, list yourself as the nominee filer, not the original payer.  The nominee is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.

The forms filed with the IRS should be the red copy so if you don't have a color printer, go to the IRS website and order the forms here: 

• Form 1096-Transmittal 
• Form 1099-S

This will allow you to enter only one fifth of the half of the gross proceeds on your return.

Then you need to determine the cost basis of the house that was sold. This would be the Fair Market Value at the date of the death of your mother. This can be estimated by searching for similar properties in the area that sold in 2016, or you could ask the realtor who helped with the sale of the house.

There are amounts that can be added to the cost basis.  The bigger your basis, the smaller your capital gain, and that means less tax, or possibly a capital loss.

If any major repairs or updates were needed to sell the house, these would be added to the basis.  

You can include in your basis the settlement fees and closing costs you paid for buying your home. A fee is for buying the home if you would have had to pay it even if you paid cash for the home.

The following are some of the settlement fees and closing costs that you can include in the original basis of your home.

Abstract fees (abstract of title fees).

Charges for installing utility services.

Legal fees (including fees for the title search and preparation of the sales contract and deed).

Recording fees.

Surveys.

Transfer or stamp taxes.

Owner's title insurance.

Any amount the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, cost for improvements or repairs, and sales commissions.

Each of you would use 1/5 of the shared 1099-S proceeds, and 1/5 of the basis of the house.

Form 1099-S isn't entered directly into the tax program. 

Enter the proceeds, the date of the sale, the cost basis of the property, and the date that you inherited the property. 

Click on Federal > Wages & Income

1. In the Investment Income section click on the Start/Revisit box next to Stocks, Mutual Funds, Bonds, Other.  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. 
2. If you haven't yet entered some investment sales, you will see a screen Did you sell any investments in 2022?  Click the Yes box.
3. On the screen,  OK, what type of investments did you sell? mark the Other box and click Continue.
4. When you get to the screen, Now we’ll walk you through entering your sale details, enter the details of the sale.  You will be able to select the type of investment in the first box [second home, land, etc.]  
5. Enter the requested information and click Continue when done.

@itdcomplicated1