I have read the following posts prior to asking our question:
https://ttlc.intuit.com/community/taxes/discussion/sale-of-inherited-home-owned-by-three-siblings-ta...
https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/what-are-the-tax-impl...
Three siblings (Peter (me), Sherry and Lori) inherited a modest home from their last-remaining parent who passed in 2020. We inherited an equal 1/3 each. A licensed real estate appraiser was hired quickly after the DOD and produced a stepped-up basis of ~$120K. After Covid, myriad other delays & a few failed attempts for an outside sale, one sibling, Sherry, requested & decided to buyout the other two. Closed in January, 2024, (house value agreed upon ~$144K); i.e., Peter & Lori received $48K ($144K/3) each. A 1099-S was received from the real estate/closing attorney's office by each of the three siblings. I believe our (Peter/Lori) LT Capital Gain is $8K/each [$144K/3 (Jan 2024 value) - $120K/3 (2020 stepped-up basis) = $8K], for our 2024 1040.
So, I guess I'm really asking a couple questions, apologies:
A) Why did Sherry receive a 1099-S for 2024, at all, as she had realized no gain? The attorney's office has, well, not been super helpful and replied that an outside company takes care of that for them. No hard-feelings, just not adequate info. IMHO.
B) Sherry never lived in the inherited home but did invest in some minor renovations (say $5K, for ease of calculations). Sherry has decided to sell to an outside party in 2025. Newest appraisal was, say, ~$155K.
What will be her basis in the inherited property, as the new sale should close in late 1Q2025, how does one arrive at that figure, and, finally, what will her Capital Gain calculation look like for her 2025 1040?
Thanks, in advance, for your reply and assistance! Sincerely appreciated (no pun intended)!!
