Cost basis

[LWLang]

my wife and her sister split the profits of an inherited property.  The FMV was 220,000 when her mom died.  when doing our taxes, do we use the $220,000 value, or do we have to split that value in half since 2 people inheriteded and split the profits?

[DianeW777]

Yes, you will split the cost basis in half for each sister to report their share of the sale. The fair market value (FMV) is the correct amount to use and split. Be sure to select 'I inherited it' when entering the sale. 

If this is considered investment property, report the sale using the steps below:

1. Under Wages & Income scroll to Investments & Savings
2. Select Start/Revisit beside Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)
3. Select Add Investments or continue to go through the screens to select 'Other' > Continue
4. Begin to enter the sale description >  Under Type select Other > Under How did you receive select 'I Inherited it' (if applicable)
5. For TurboTax Desktop you would enter the description 'Inherited Property' and select 'Long Term' as the hold period
6. Enter your sale date and 'Various' as the Acquired date
7. Continue to complete the screens until you arrive back at the Wages & Income main page.

Inherited property is always considered to have a long term holding period which provides favored tax treatment.

[LWLang]

Thank you.  But just to confirm, we will each use $110,000 for the FMV on out taxes which is half of the $220,000 actual FMV of the home when she died?

[DianeW777]

Yes. Each beneficiary will report half of the sales proceeds and half of the fair market value (FMV) of the inherited property as cost basis ($110,000).

@LWLang