Sale of an inherited object

[aphil138]

I found an object while cleaning our my deceased parents home that I imagine would be considered an inheritance.

I subsequently sold the object through a 3rd party auction house on a lark (parents had no idea of it's value). 

I received  an amount more than expected ( >600.00$).

The auction house will be sending me a 1099x and will be reporting it to the IRS.

Is this money considered reportable Income or just considered part of  my inheritance?

[KrisD15]

If the item was found because you inherited the home and its contents, the item would be inherited and valued as of the Fair Market Value on the date of passing. 

If sold soon after, there would be no gain to report. 

That would be a non-reportable event. 

Keep the 1099 with your tax file, but it needn't be entered. 

[aphil138]

We have no idea of the fair market value at the time of the inheritance. It wasn't until we sold it it at auction when we found  out what it was worth.

Would it still be just considered an inheritance and just not report it?

We sold it  through a 3rd party (auction house) and they are obligated by law to report sales over 600.00?   Does that mean WE have to report it or just considered it an inheritance?

[NCperson]

@aphil138 personally, if the auction house issues you a 1099, I would report it.  But while you don't know what it was worth on the date of death, it is reasonable to assume its value on the date of death was the same as what the auction house was able to sell it for.  So the net effect is no gain on sale, but you have reported what the IRS has in its records.  

[fanfare]

The so-called EXPERT answer above is wrong.

Report any tax documnt you receive.

You will enter/adjust the basis to be what you sold it for.

After auction expenses, you will have a loss on the transaction.

Your holding period is Long Term, because it was inherited.

@aphil138 

[aphil138]

Would my auction expenses be the difference between the "hammer" price and the my net proceeds?  The difference I see now, are the percentage I paid the to the auction house, the "buyers fee", and my travel to and from the auction house (airline flight)? Those are legitimate expenses? 

Any IRS rules that I can quote?

[fanfare]

Travel for business is deductible.

You are not in the business of auctioning found items.

@aphil138 

[NCperson]

the buyer's fee is unlikely to be deductible. 

Likely: if the 1099-MISC is the "hammer price", then the cost basis is the same as the "hammer price" - the buyer paid the buyer's fee and it's not in the 1099-MiSC. Not deductible since you did not pay it. 

Possible, but unlikely: if the 1099-MISC is the "hammer price" + the buyer's commission. then the cost basis is the same as the sum of these two components.  - the market value is presumed to include the buyer's commission, but that is the same as the market value on the date of death.