My father died & house had TOD Deed to me - on sale I received a Form 1099-S. Since house was TOD & sold below market value do I need to report sale and if so how/where?

[Ralpho]

My father died May 24, 2018. His house had Transfer on Death Deed to me. The house had estimate value of $280,125. On May 30, 2018, I sold the house and received a Substitute Form 1099-S listing gross proceeds of $240,000. The Closing Disclosure has net proceeds of $237,131.44 after closing costs. Since house was TOD to me and sold 6 days after my father's death at less than market value, do I still need to report the sale and if so how and where on TurboTax?

[MichaelL1 · Accepted solution]

Yes, you need to show the sale.

IRS will get a copy of the 1099S.

The sale will be reported in Investment property section.

Due to being inherited it is long term gain regardless if held only 5 days.

Basis is Fair Market Value on date of death.

Sales price less costs (closing costs, clean up etc) equals net sales price less basis (FMV) - gain or loss that will be on your tax return.

[Ralpho]

Property was TOD to me. I didn't think this was then considered an inheritance? Do I still report in INVESTMENT PROPERTY as you describe?

[MichaelL1]

TOD is considered an inheritance.  It is same as if it did not have TOD and the Will said it should go to you.  However TOD is much simpler way to transfer upon death.

[Ralpho]

He also had a few bank accounts TOD to me. Do I need to report the money from these? I thought "The transfer of property of a decedent to....the heirs or beneficiaries, is not a sale or exchange or other disposition. No taxable gain or deductible loss results from the transfer."?

[MichaelL1]

The bank accounts you are correct there is nothing to report (other than possibly interest).  The house is different as this is an asset you sold.

[Ralpho]

Thank you!

[brl1944]

at what detail level do I insert my 1099-S gross proceeds?

[brl1944]

At what detail level within the Investment property section

[PatriciaV]

The sale of inherited property is reported as an "Other" investment type under Stocks, Bonds, etc. Use this link: Inherited Property.