I and two siblings sold parents' home in 2017 (inherited). How do I enter ACTUAL net gains and related information given addition and other work done to home?

[gbtrx96]

My two sisters and I inherited the home in 2010.

2010 Fair market value of home + land:  $160,500

Addition to home (Kitchen/den extension): $40,855

Repair/improvements done during sale negotiation: $14,000

This all totals up to $215,355

House was sold for $223,500. Thus total gain (subtracting the above) was $8,145, or $2715 to each of us after all costs are accounted.

The 1099-S only shows gross proceeds of $223,500 for the sale, of which my allocation is $74,500.

How do I enter relevant numbers to show all this and report my net gain of $2733.33?

[KrisD]

You would start by reporting your basis. Your basis is the Fair Market Value of the home when you inherited it plus improvements. The basis is subtracted from your share of the sale to arrive at any gain. Your basis is 53,500 FMV plus improvements 18,285 for a total of 71,785. Your portion of the sale is 74,500, so you had a gain of 2,715.

The 1099-S should report the breakdown of your share only. You would report the 1099-S and the basis of 71,785 for a gain of 2,715. If the 1099-S is not reported correctly, you can ask for a corrected copy. 

IF the property was used as a rental at any time after you inherited it, the depreciation taken, or could have been taken, would need to be recaptured.

According to the IRS:

“Multiple Transferors

For multiple transferors of the same real estate, you must file a separate Form 1099-S for each transferor. At or before closing, you must request from the transferors an allocation of the gross proceeds among the transferors. The request and the response are not required to be in writing. You must make a reasonable effort to contact all transferors of whom you have knowledge. However, you may rely on the unchallenged response of any transferor, and you need not make additional contacts with other transferors after at least one complete allocation is received (100% of gross proceeds, whether or not received in a single response). If you receive the allocation, report gross proceeds on each Form 1099-S accordingly.

You are not required to, but you may, report gross proceeds in accordance with an allocation received after the closing date but before the due date of Form 1099-S (without extensions). However, you cannot report gross proceeds in accordance with an allocation received on or after the due date of Form 1099-S (without extensions).

If no gross proceeds are allocated to a transferor because no allocation or an incomplete allocation is received, you must report the total unallocated gross proceeds on the Form 1099-S made for that transferor. If you do not receive any allocation or you receive conflicting allocations, report on each transferor's Form 1099-S the total unallocated gross proceeds.”

https://www.irs.gov/forms-pubs/form-1099-s-proceeds-from-real-estate-transactions

[gbtrx96]

Thank you! So using TurboTax Deluxe downloaded version, the only questions asked are NET Proceeds and FMV of the home at time of inheritance. 1099-S has GROSS proceeds of $74,500. There is no place in the guided entry of information to enter alterations to the FMV to change the basis based on improvements.  Do I simply enter the adjusted basis when it's asking for FMV of the home when it sold?  And is NET proceeds box in TurboTax asking for GROSS proceeds from 1099-S?  Entering the numbers as such gives me the $2715 overall gain, but I'm not technically answering the exact questions asked by the software. Am I okay in doing this?