Proceeds From Real Estate Transaction

[MikeR5840]

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? 

[GloriaL]

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:

1. Open or continue your return.
2. In the search box, type in sale of inherited home and select the Jump to link in the search results.
3. Answer Yes on the Did you sell any stocks, mutual funds, bonds, or other investments in 2020? screen.
4. On the OK, what type of investments did you sell? screen, select Other and then click on Continue.
5. On the Tell us more about this sale screen, enter the filer’s name listed on your 1099-S.
6. On the next screen, select Land and answer the questions to finish entering your sale.

[MikeR5840]

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.

[GloriaL]

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

[Critter-3]

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.