How do I deal with the proceeds of the sale of household goods for an estate?

[-rdlarsen1]

How do I present the sale of household goods for an estate? We had an estate sale and also sold a few items on commission through a medical equipment retailer. I can't see where I should show the basis in the goods or the commissions paid to the sale's agents.

[MichaelL1 · Accepted solution]

Basis will be fair market value at the date of death which is probably about you sold the items for.

I assume you are doing the 1041 Estate return.

Go to Income tab 

go to Investments

Stocks, Bonds other.

Note this will be long-term gain or loss.

Check box E Basis not reported. 

You will enter the sales price, sale date, cost, and purchase date (I would use one date) and also lump things together as Household Goods. 

[Carl]

"and also sold a few items on commission through a medical equipment retailer"
I assume this estate is for the disposition of assets of a deceased person. While you can do this, unless the person for whom the estate was created was in the business of reselling items on commission, this should not be reported on the estate return, but instead on the personal return of the person who agreed to resell items on commission. For the estate to sell them, that means the estate pays the taxes and the person to whom the proceeds are paid receives those proceeds tax free.  I question the legality of that, as I would expect the IRS to view that as illegal use of the estate as a pass-through entity so the recipient of the proceeds avoids paying taxes on those proceeds.

[-rdlarsen1]

These were chairs that I sold through the equipment retailer that originally sold them to my Dad. The retailer took a commission for the sale that reduced the amount that the estate received on the sale.

[Carl]

The estate needs to issue the retailer a 1099-MISC, unless the estate wants to pay the taxes on the gains from the sale.

[-rdlarsen1]

I guess I'm not getting this. My Dad bought the chair for $1,200. After he died, we had the retailer resell it. It only resold for $600 and out of that we had to pay a $150 commission to the retailer. We netted $450. I don't see any gain on the sale.

[MichaelL1]

Your actual sale price was $600 less $150 sales cost and the basis was Fair Market Value at date of death, which could be exactly what you got for it. Or a little bit more, there is no gain. You need to basis or cost entered which is FMV at the date of death.

[-rdlarsen1]

OK, thanks for the clarification.

[NameForYou]

@MichaelL1  Your answer in this thread is what I've been seeking.

I am the executor for my father's estate. I'd like to clarify what you said in your answer in this thread as it pertains to dates to enter. You said "I would use one date." What does this mean though? Since the Estate held an estate sale to sell household goods/belongings, would I enter the following:

sales price = total gross proceeds from estate sale?
sale date = actual calendar date of estate sale?
cost = dollar amount of estate sale company's commission?
purchase date = decedent's date of death? 

Would I use the same approach to make additional entries to report proceeds received by the Estate from the sale of the decedent's other personal property (not referring to the sale of the personal residence, which I've already entered in TT; I'm talking about other things that were sold like a vehicle, and a firearms collection. These were just personal belongings; the decedent did not own a business.)? 

Overall, I do not expect to report any gains or losses since everything was sold very soon after death and there is a stepped-up basis. With zero tax liability, and a discretionary partial distribution paid to beneficiaries in the tax year, the K-1's should show all zeros, I believe. Do I still provide the K-1's to the beneficiaries in this case? (the estate is not complete though I'm hoping I can wrap it up within 65 days of the start of 2020 so I can make this 1041 the initial and final return)

Thanks so much for your help! I don't find form 1041 to be very straight-forward at all, not even with TT.