My husband's father passed away in 2014 leaving his Condo to his children (my husband and his sister). It was put into an LLC with my husband and his sister equal partners. The Condo was never rented out except to my husband nephew who rarely paid rent or paid under the market value until my husband and his sister decided to sell the property. My husband received a 1099s for his share of the sale but it shows to be more than what he received in cash by $13,400.00. Also, we live in Texas and his sister and the property are in Colorado. And, the 1099s is in my husbands 'full' name (which happens to be the same as his fathers - the deceased) but the "TRANSFEROR's" ID number is [phone number removed] (obviously, NOT my husbands SS#).
I am trying to do our taxes for 2018 and I have some questions:
1) Since the 1099s is in my husbands name (which could be his dads name) but doesn't have his SSN on it, do we have to claim it?
2) We sold our PRINCIPLE PLACE OF RESIDENCE in 2017, and too the exemption of the proceeds because it was under $500,000 (married). Can we do the same with this? It was NOT our principal place of residence tho. If so, HOW? When I try to enter it in TURBO TAX and use "second home" or "everything else", it taxes the gain. I am using the amount of the 1099s and a compatible CONDO that sold in 2014 for the MARKET VALUE. This is giving us a GAIN of approx $9.950. We were told that we would NOT have to pay taxes on this money. But looks like we are!!
3) Since we are in Texas and it sold in Colorado, do I have to also claim this on the Colorado State Return?
4) In previous years we have received a K-1 for this property. Should I receive a FINAL K-1 for it for 2018?
Any other information you can share with me would be GREAT!! Thank you so much, Karen
1. Yes you will need to claim your husbands share of the inherited property sale on his return. Doesn't matter how it is reported on the 1099-S. Ideally, your husband should have requested a corrected 1099-S form for his share. It's a little late for that now, so retain records/documents that will support your husbands share from the sale. The IRS receives a copy of the 1099-S also.
2. Enter the inherited property sale in the Investment section, Stock, Mutual Funds, Bonds, Other. Select second home, then enter your husband's share of the proceeds, date sold, inheritance for how acquired, date inherited property which is the date of death in 2014, FMV at date of death. Then gain/loss is computed. Had you sold in 2014 there might not have been a gain. But 5 years later, the property has likely increased in value, so a gain is calculated. Second home do not get gain exclusion treatment like your primary residence.
3.Yes, you will need to file a Colorado nonresident return, because this is Colorado source income. See this link.
4.Yes, whomever prepares the LLC should send a final LLC if the LLC was closed.