Part of your basis is considered a gift and part of it will
have a inherited stepped up basis. You will have to do some research to arrive at a fair
approximation of the fair market value (FMV) in 1997 when it was gifted. County
records for assessments and sales would be a good place to start, or a realtor
may be able to help.
Each person initially has a 1/3 share of the original basis
in 1997. After your father's passing, you and your sister each have a 1/2
share in your father's portion.
Each of you add to the cost basis of your share, the
'stepped-up' basis of the inherited portion.
Ex: Home's FMV in 1997 = $180,000 Each has a
cost basis of $60,000. Father then passes. The fair market value of his share
is now $80,000 (stepped up value). Now the remaining owner's add 1/2 or $40,000
to their original basis of $60,000 for a total basis each of $100,000.
Each report their new basis and proportionate (1/2) 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 'everything else' 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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