1099S gross proceeds that went to the estate EIN on the for sale of passed home taxable.

[427cobra302]

Sept 2023 my wifes parent were both passed. Their house had to be sold and the net proceeds are going to the estate EIN. Are the gross proceeds reported on the 1099S taxable income and if so does this come out of the final tax filing of the estate for 2023.

[Anonymous_]

Is the estate closed (i.e., terminated upon the sale of the house)?

A 1041 will almost certainly need to be filed if the estate receives a 1099-S.

See https://www.irs.gov/instructions/i1041#en_US_2022_publink1000285942

Any gain (loss) will be measure by the difference between the selling price (less selling expenses) and the basis of the property (typically the fair market value on the date of death of the decedent).

[Mike9241]

sorry for your loss. usually, the property passes from the first to die to their spouse. in a community property state the spouse receives a step-up to the full fair Marlet value. then when they die the property passes to their estate and there is a step up to Market value for 100% of the value. this assumes they did not create a housing trust or some other tax vehicle which would change this answer. so when it's sold the gain is the difference between the sales price net of selling expenses vs the FMV on date of death. you got a 1099S in the estates EIN so if you don't report it expect a notice from the IRS

in a non community property state, the first survivor only receives a ste-up to FMB for the portion inherited from the deceased spouse. but when they die since thy now own 100% there is a step-up to 100% of FMV. again, this assume that no housing trust or other tax vehicle was created to own a share of the property.     In most cases such a trust provides that the surviving spouse gets to live in the property rent free for their life and then passes to named beneficiaries. This allows the beneficiaries to take the property with the FMV equal to date of death value. One advantage of a trust is to avoid probate.