If 2nd home was inherited by 5 daughters via lady bird deed, when each files their taxes do they enter FMV as sale price & net proceeds as what each rec'd individually?

[letibenavides]

The parents passed in 2017 and left their house to their 5 daughters via lady bird deed. The house was sold within 6 months of parents passing. There is no valuation of the house when the parents passed, only the price the realtor and daughters decided on what to list the house at. If that price is used as the stepped up cost basis and then the net proceeds is what each daughter received, this puts them at a loss since the total proceeds was split 5 ways. Does this sound right?

[Phillip1 · Accepted solution]

Yes.

Since the home was sold so soon after the parent's passed away, using the sales price as the inherited "stepped up" basis is reasonable. Therefore the cost basis would be the sales price for which the home was sold, and the net sales proceeds (after sales expenses) may likely result in a capital loss.