Is this inheritance? Father-in-law passed '19. Sol...
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Rhodes06
Returning Member

Is this inheritance? Father-in-law passed '19. Sold home '20. Husband & step-sibs equal split proceeds. Husband no 1099 b/c not a seller. Do we report proceeds received?

My husband's father passed in 2019.  He had been living in his wife's home who passed in 2009.  The home is in my husband's step-sibling's names.  We sold  the home in 2020.  My husband's step-siblings included him in an equal 1/3 split of the proceeds from the sale of the home.  My husband did not receive a 1099 at closing because he is not a listed seller.  How do we report the proceeds we received? Is this considered an inheritance?
3 Replies
martinmarks1919
Level 8

Is this inheritance? Father-in-law passed '19. Sold home '20. Husband & step-sibs equal split proceeds. Husband no 1099 b/c not a seller. Do we report proceeds received?

Not an inheritance if he's not in the line of succession or named in the will.....sounds more like a gift from the step siblings who would need to file a gift tax return. You all should get help from a tax pro.

DianeW777
Expert Alumni

Is this inheritance? Father-in-law passed '19. Sold home '20. Husband & step-sibs equal split proceeds. Husband no 1099 b/c not a seller. Do we report proceeds received?

Yes this is an inheritance if the home was put in your husband's name after death based on the will if applicable.  

 

You can report the sale of this inherited home as inherited property as long as your husband did not live in this home and use it as his main residence.  The cost basis for your husband will be the fair market value (FMV) on the date of death multiplied by his percentage of ownership. Selling price is usually a clear indication of FMV if close to date of death. Inherited property is always considered held long term, which also provides the tax advantage of capital gain treatment.

 

In its simplest terms, FMV is the price that an asset would sell for on the open market.

Capital gain treatment means the tax is limited, regardless if your regular tax rate might be higher.

I agree with @martinmarks1919 -- It is a gift from the siblings if it passed on death to them and then they gave a share to the husband.

If this is the case then the cost basis for your husband would be the same cost basis as it was in the hands of the siblings for his prorated share.

[Edited: 04/01/2021 | 8:59a PST]

martinmarks1919
Level 8

Is this inheritance? Father-in-law passed '19. Sold home '20. Husband & step-sibs equal split proceeds. Husband no 1099 b/c not a seller. Do we report proceeds received?

NO it is NOT an inheritance unless it passed from the decedent via will or intestacy to the husband @DianeW777. It is a gift from the siblings if it passed on death to them and then they gave a share to the husband.

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