Estate sold deceased home, adjusted base zero, net proceeds distributed to heirs, is a k-1 required

[jglivergood]

estate sold inherited deceased home distributing net proceeds to heirs.  Adjusted cost basis is zero. Is there a k-1 required, if so, what box?

[ToddL]

Why is the adjusted basis "zero"?

[jglivergood]

1041 form on business turbo tax showed sale actually at a sizable loss, but not deductible.

[ToddL]

Are you confident there was a loss on the sale?

If so, a K-1 is not required to report the non-taxable distribution of estate assets, only income items. If a K-1 is necessary to report income, you can also report the distributions.

[jglivergood]

According to turbo tax calculation, it was a loss given the adjusted basis and other cost.  Net proceeds were distributed to three heirs according to deceased will.

[ToddL]

How did you determine the adjusted basis, what was it and how much did you sell the property for?

[jglivergood]

Sale was 146,500 cost basis fmv 135,000 + expenses 91,820 equals loss of 80,320.  Actual net cash proceeds were 54,770 which were distributed to three heirs. Understand heirs do not have to pay any tax on inheritance from property willed to them. Understand estate has to file k-1 regardless even if zero.  There was not any income from other sources given to heirs.

[ToddL]

How did you arrive at a fmv cost basis of $135K. Why $92K of selling expenses? Were they repairs?  Just not quite adding up.

Also, very important - what happened with the house between the time owner passed away and it was sold.

[jglivergood]

Comps from real-estate, Selling cost was Mortgage + settlement charges + repairs. Heirs stayed in house during this time attending school.  I will double check turbo tax line items in program, but seem to be correct.

[ToddL]

That makes sense - a mortgage is not a selling cost for purposes of calculating gain or loss.. If the heirs stayed in the house, a loss, if any, is non-deductible

[ToddL · Accepted solution]

A K-1 is not required to report the non-taxable distribution of estate assets, only income, deductions, credits, and adjustment items attributable to the estate. 

[jglivergood]

Thanks