Each person initially has a 1/4 share of the original cost. After the mother's passing, then the remain 3 children each have a 1/3 share in the mother's portion.
Each of the 3 remaining add to the cost basis of their on share, the 'stepped-up' basis of the inherited portion.
Ex: Home Cost originally = $200,000 Each has a cost basis of $50,000. Mom then passes. The fair market value of her share is now $60,000 (stepped-up value). Now the remaining owner's add 1/3 or $20,000 to their original basis of $50,000 for a total basis each of $70,000.
Each report their new basis and proportionate (1/3) share of the sale proceeds on their tax return to compute gain. Enter under the investment section.
To navigate to the section:
- In
your open return, select Tax Tools
- Tools
- Topic
Search
- Type 'investment
sales' in the box, then select GO
On the page, Choose the type of investment
you sold, select the radio button for 'second home' and continue to
enter the property information and your proportionate share of the sale
proceeds.
On the page, Tell Us How You Acquired This
Home, enter how you acquired the home and continue with the interview.
Gain/loss is computed and moved to appropriate form for your proportionate
share.
Note: If
you received a 1099-S for the sale of the home, make certain the proceeds are
recorded for your share only. If not, contact the payer for a corrected form.
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