Inherited house questions - timing of sale & 1099-S form

[DXY2021]

Can I please get your help on a few inherited house questions?   i did search the forum but had a few specific questions please

FMV question

-  inherited a house and sold it within 3 months.  Does the short time frame help support that we can use the sales proceeds as the same estimate of the stepped up cost basis ? in other words, its very unlikely the house changed value in the 3 months.  In fact we have comparable sales close to the inherited date that are roughly what the inherited house was sold for 3 months later

Sales proceeds and cost basis definition

- have the substitute 1099-S from the closing but haven't received a 1099S in the mail yet.  Should i be contacting the title company to inquire since i don't know what they reported on the various boxes sent to IRS (i'm worried something may not match if i guess from the closing documents)

- Also, I'm assuming i need to report this in TurboTax, but had a question since the substitute form doesn't have proceed numbers on it, just our % share (it was split with family).   So my question - is "sales proceeds" the same as the check we received at the closing?  or is the gross sales value of the property?  The check we received is the total sales price less selling costs - trying to figure out if i should be showing the gross price as sales proceeds and the cost basis as the value + selling costs.  Or just keep it simple and show the cost basis  identical to the sales proceeds as noted above

thank you again for help !

[Mike9241]

can't say about FMV after 3 months - different areas of the country had significant changes in house prices in a relatively short period of time.  your best bet is to get an opinion, doesn't have to be in writing, from a realtor in the area. 

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you're saying the substitute 1099-S did not have the proceeds on it and there were multiple heirs. call the title company. however, there should be no reason why the total sales proceeds on all the formal 1099-s should not match the closing statement gross sales price.

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"sales proceeds" the same as the check we received at the closing? absolutely not.  gross proceeds are reduced by things like closing costs, mortgage payoff, proration of real estate taxes and other expenses, and other items.  gross proceeds are usually listed at the top of the closing statement while you got a fraction of what is probably checked off as due to seller. 

[DXY2021]

thanks so much for the feedback - a few follow ups please

yes the substitute 1099-s was had written by the title company on a standard form with the % but they didn't write the gross proceeds in the row indicated for that, so i feel like i need to call the title company just to check- but i agree its visible on the closing statement at the very top as the total selling price

As for "proceeds" here is my confusion - the input screen to turbotax says "sales proceeds" but doesn't say input gross or net proceeds.  So if I understand.... I should be entering GROSS proceeds in the cell? so that would be the "sale price of the property" on the closing stmt x our share of the house as noted on the substitute 1099-s.    And please confirm if I understand cost basis row - if we feel the FMV hasnt changed in 3 months, we simply put the gross sales price in cost basis row BUT we'd also add all those closing costs (commissions) adjusted for our ownership share ? thank you again for thoughts

Footnote- what's throwing me off on the proceeds question a bit - when i click on the "proceeds" hyperlink and this is what pops up

Sales Proceeds

Sales proceeds are the total amount you received from the sales.

Your proceeds for sales of securities are usually reported to you on Form 1099-B or on a consolidated broker's statement. They may be listed as:

- Gross Proceeds
- Gross Proceeds Less Commissions
- Net Proceeds
- Net Sales Price
- Dollar Amount of Transaction

In most cases the amount reported has already been reduced by any fees or commissions. However, if you need to report fees, commissions, or other sales expenses that were not subtracted from the proceeds reported on Form 1099-B, you can enter these expenses as additional info when prompted to enter Sales Expenses.

[GeorgeM777 · Accepted solution]

Following up on the comments from @Mike9241, yes, enter your gross proceeds.  You will make the necessary adjustments to the gross sales price later when asked to enter information about commissions, fees, etc.  And are you reporting your percentage share of the gross proceeds? We ask because you indicated in an earlier post that the substitute 1099-S includes just your percentage share of the inherited home.

And yes, if the FMV of the inherited home has not changed since the date of inheritance and such value is the same as the sales price, then that is your cost basis.  You would not be making any adjustments to the cost basis unless you made renovations/repairs to the home prior to sale. The adjustments are made to the sales proceeds.

@DXY2021

[DXY2021]

thanks all for your feedback 

to clarify - i actually haven't received the 1099S yet (found out it will be mailed by 2/15) but was trying to understand the process in advance.   I need to see what they report in box 1 but all your answers make sense - my guess is that the 1099 will already be at the % share amount - thank you all again !