topic Bequests in a Will in Get your taxes done using TurboTax

Bequests in a Will

louisleichter909 — Thu, 25 Feb 2021 16:01:24 GMT

My wife's mother died in 2020. Her will requested that after the sale of her house certain amounts were to be given to charities and two two nieces. My wife sold the house and sent checks to the charities and nieces. We are taking the donations to the charities as a charitable deduction (allowed in our state). Can she deduct the bequests to her nieces?

Do the bequests go as charitable deductions or as decrease in the proceeds from the sale of the house?

Re: Bequests in a Will

DianeW777 — Thu, 25 Feb 2021 16:52:16 GMT

If the property was immediately transferred to your wife and there was no estate tax return completed (Form 1041), then you can take the charitable donations on your tax return. You will also report the sale of the home as an investment property that was inherited. The following steps will show you how to record this in TurboTax.

Charitable proceeds are not included in the sale of the inherited home.

The bequests to the nieces is considered a gift from your wife and are not entered on the tax return anywhere. However, if the gifts were more than $15,000 (potentially $30,000 if gift splitting applies), then a gift tax return would need to be filed on Form 709 (Form 709 Instructions).

Sign into your TurboTax account, then follow the steps below and also click here for more assistance.

Select Wages & Income > Scroll to Stocks, Mutual Funds, Bonds, Other > Revisit or Start
Select Edit beside the sale or begin the sale entry
No you did not receive a Form 1099-B > Select I'll enter one sale at a time
Continue to enter your sale (purchase price for you will be the value on the date of death which could be the selling price if close to that date)
Now you can follow the screens to enter your sale
Continue through the rest of the screens. There should be little to no gain on the sale.

Re: Bequests in a Will

Opus 17 — Thu, 25 Feb 2021 16:57:54 GMT

You may want to see an expert, although it may be too late to change things.

There is a difference between

1. if the estate sold the home, paid the money bequests and donations, and then paid the residual balance to your wife,

2. versus your wife inherited the home, sold it, donated the contents, and paid the nieces.

In #2, @DianeW777 is correct. Your wife inherited the house and contents, and the donation of the contents goes on your tax return, and the payments to the nieces are gifts from your wife and not tax deductible on her tax return.

However, in case #1, the estate needs to file a separate estate tax return to deal with everything. I don't know any more about this and you may need to have your situation reviewed by an expert in your state.