My wife's father died in 2019, her dad and uncle were joint owners of some undeveloped land. The land sold March of 2020 and we received a 1099-S Proceeds From Real Estate Transaction showing her portion of money received from the sale. Do I include this Gross Proceeds (and where) in my taxes for 2020, would it be Capital Gains?
Yes, you would include this on your tax return and it is considered a capital gain.
The basis of property inherited from a decedent is generally the fair market value of the property on the date of the decedents death.
To determine whether you have a gain or loss when you sold the property, you subtract its basis from the sale price.
Note: To report investment sales, you’ll have to use TurboTax Premier, TurboTax Self-Employed, or TurboTax Home & Business.
To enter the 1099-S in TurboTax:
- Open or continue your return.
- In the search box, type in sale of inherited home and select the Jump to link in the search results.
- Answer Yes on the Did you sell any stocks, mutual funds, bonds, or other investments in 2020? screen.
- On the OK, what type of investments did you sell? screen, select Other and then click on Continue.
- On the Tell us more about this sale screen, enter the filer’s name listed on your 1099-S.
- On the next screen, select Land and answer the questions to finish entering your sale.
Thanks, some of the problems I'm seeing:
We don't know what the fair market value was at his death. We know the property sold 4 months after because her uncle told us that he sold the property and said her, her sister and brothers portion from the sale was $30K each, The bank sent us a check and the 1099-S, and the uncle won't tell us what he pocketed.
If no appraisal was done at that time, you will need to engage the help of a real estate professional to provide the FMV for you.
Your total shared basis would be the inherited basis plus the cost of repairs & improvements.
Each owner would report an allocated portion of the sale transaction on his/her individual tax return. The buyer’s concession would be deducted from the gross sales price, either as an adjustment to gross proceeds, or as a selling expense.
For additional information regarding this, please refer to: IRS: Inherited Property
This sounds like a messy situation ... since you sold shortly after death then simply enter the sale of $30K and use the same $30K for the cost basis to zero out the sale. Although the cost of sale could possibly put this sale into a deductible loss if it will be too much effort to get the figures then just make the sale a wash.