1099-R and 1099-S

[jksis]

My father passed away in 2024 and I received a 1099-R from the funeral home for unused funds from the down payment I placed for funeral costs, in addition I also received a 1099-S for the sale of his home, because he put me on the deed over 10 years ago, even though I didn't live in the home after the age of 11. Where or what section do I enter these into Turbo Tax?

[KrisD15]

Are you sure they gave you a 1099-R ? That reports retirement income so a 1099-R would not be used to reimburse you for a down payment. Can you clarify that?

When you say your father put you on the Deed, HOW he did that will make a big difference on how you handle the sale. 

If he made you half owner, your basis will be half the value when you were added to the deed and half the fair market value on his date of passing. (you would have inherited half) 

That value is what you would use to compute Capital Gains. 

If HOWEVER he used a "Life Estate" and you were named "Remainderman" the sale would be treated as a sale of an inherited home (You inherited the entire property) and you would get the "Stepped-up" basis of Fair Market Value on date of passing, which usually results in no reportable gain if the sale is immediately after the date of passing. (and perhaps a small loss for closing costs) 

Real estate laws are governed by the state, not the IRS, so you should speak with a local real estate attorney if you are unsure of the terms of your ownership. 

Any additional details about the 1099-R would be helpful. 

[jksis]

Yes, it says 1099-R from "funeral directors life insurance co" in the payer's box. There's a gross distribution, a taxable amount, and an employee contributions/designated roth contributions or insurance premiums box, all of which have an amount. Everything else is blank. With regard to the 1099-S, my brother was also on the deed as well.

[KrisD15]

Is the 1099-R issued in your name or your father's? It sounds like your father had a policy that paid the funeral home and they issued the unused portion? 

Again, depends on the deed. If you three were owners, your basis would be your third at the value of when you were added to the deed and also 1/6th of the value on the date of your father's passing. Your brother would have the same basis. Split the sales proceed and closing costs in half.

If it was a life estate, it would be the same as the two of you inheriting it and taking the 2024 fair market value.

If you used a Title Company, they should be able to tell you what type of deed it was. 

[jksis]

The 1099-R is issued in my name. One year prior, almost to the date of my father's passing, I ga r the funeral home the amount that they quoted me for costs. The unused amount they gave back to me in a large lump sum, and then they issued me a 1099-R for taxes.

[KrisD15]

What is in Box 2a? 

[jksis]

$37.75

[KrisD15]

Thank you. I think they usually use 1099-INT since the amount in box 2a is probably interest earned on the policy, but no matter. 

You enter the 1099-R the same as an IRA withdrawal and you will need to claim that $37.75 as income. 

You enter it under 

Wages & Income

Retirement Plans and Social Security

IRA, 401(k), Pension Plan Withdrawals (1099-R)   START

[jksis]

Ok, perfect, thank you. In addition, I spoke with the real estate agent we used and he will find out tomorrow what type of deed it was. I will respond as soon as I know that information.

[jksis]

@KrisD15 Ok, with regard to the 1099-S, it was a warranty deed for joint tenants that was done 3/12/07.