My mother passed away and her home transferred to me by TOD addendum to her deed. I sold the home what can I deduct?

[emm64]

The home had a Fair Market value of $145,000 at the time of her death and I sold the house a few months later for $145,000 and I received a 1099s for the $145,000.  Because my mother was on Medicaid a Medicaid Recovery of $114,000 was deducted a closing.  

On form 8949 I'm entering Proceeds (sales price)  $145,000

Cost or other basis $145,000

Amount of adjustment (closing cost and real estate commission) $12,137

So this shows a loss of $12,137  

First question Is this how I should be entering the sale?

Second am I also able to claim the Medicaid Recovery as an adjustment?  

[AmeliesUncle]

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@emm64 wrote:

First question Is this how I should be entering the sale?

Second am I also able to claim the Medicaid Recovery as an adjustment?  

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Yes.

No.

[Irene2805]

I'm sorry for your loss!

You can enter the sale of your mother's home using these steps:

1. On the Wages & Income screen, scroll down to Investment Income.
2. Click the Start/Revisit box next to Stocks, Mutual Funds, Bonds, Other (1099-B).
3. On the screen asking about the type of investment sold, click the Other box and click Continue.
4. If you've already entered other investment sales, click the box to Add more sales.
5. If you haven't entered other investment sales, proceed through the screens, entering the requested information. 
6. On the screen asking for details of the sale, enter the type of investment as Other, and that you received the investment by inheriting it.  
7. Remember to subtract the selling expenses from the $145,000 for the proceeds.
8. Enter the rest of the information on the screen and click Continue.

If you sell an inherited home for less than its stepped-up basis (the value on the date your mother died), you have a capital loss that can be deducted (assuming you don't use the home as your personal residence). However, only $3,000 of such losses can be deducted against your ordinary income per year. Any excess must be carried over to future years to be deducted.

AmeliesUncle is correct in that the Medicaid recovery can not be used as an adjustment.

[EDITED | 1/15/2020 3:58pm PST]

[AmeliesUncle]

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@Irene2805 wrote:

1. Continue through the screens, entering the requested information.  Consider the property a "second home" and indicate that you inherited it.

Unfortunately, capital losses on the sale of a second home are not deductible.

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If I remember correctly, the courts have repeated said the loss from an inherited home is deductible (assuming no personal use).  So DON'T report it as a "second home".

[Irene2805]

You are correct in the treatment of an inherited property--I was thinking of a different scenario.  I have edited my original answer.  Thank you!

@AmeliesUncle