As a beneficiary the payments from the sale would be taxable to the extent of interest income. The interest portion of the payments would be included with your other interest income. It would be listed under "seller financed interest".
Use the instructions below to
enter your interest income from your sale.
- Sign into
your TurboTax account
(online or desktop)
- Select Wages & Income
- Select Interest & Dividends
- Select Interest from Seller-Financed Loans
- Continue
to make your entry - Do not enter an installment sale
- Click the
image attached to enlarge and view.
The principal portion of the payments would not be taxable because the value on the date of death of the remainder of the note would be your cost on the date of death. This would eliminate any capital gain for you in relationship to the sale itself.
If an inheritance return was filed any tax would have been paid on the value at that time. If an inheritance return was not filed, it was because it was not required. This is a separate return and is not part of your individual tax return.
