Retirement tax questions

Whether you can deduct the sales tax paid on the proceeds of the sale depends on how you elect to report your sales taxes. The Internal Revenue Service (IRS) permits you to write off either your state and local income tax or sales taxes (not both, with some exceptions) when itemizing your deductions. People who live in a state that does not impose income taxes often benefit most from this deduction.

See this TurboTax tips article for more information about how to deduct sales taxes.

To determine if the sale of inherited property is taxable, you must first determine your basis in the property. The basis of property inherited from a decedent is generally one of the following:

• The fair market value (FMV) of the property on the date of the decedent's death (whether or not the executor of the estate files an estate tax return (Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return)).
• The FMV of the property on the alternate valuation date, but only if the executor of the estate files an estate tax return (Form 706) and elects to use the alternate valuation on that return. See the Instructions for Form 706.

See this IRS webpage for more information.