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1099S

I received a 1099S (2021) from a title company for the proceeds from the sale of my deceased brothers house for 191,500 that I inherited in 2021.  Do I need to file an amended 2021 return and declare this as income.  I thought that inheritance in theses amounts was not taxable. 

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2 Replies

1099S

your inheritance was the value of the home on date of death.

any gain over that when you sell the home is taxable.

1099-S notifies the IRS to expect to see the sale reported on your tax return.

DianeW777
Expert Alumni

1099S

Yes, you need to file an amendment.  Inheritance itself is a different tax than individual income tax.  An inheritance return is not required in your situation, however your personal individual income tax does tax this income if there is a gain or if there is a loss.

 

Be sure to read all the instructions carefully before you begin so that TurboTax knows the original figures and the changed figures.

The cost basis for you is the fair market value (FMV) of the home on the date of death of your brother.  I am very sorry for you loss.

 

This means that if you sold the house within in a short time of your brother's death, then your cost basis would be very close to the sales price. Essentially you will have little to no gain and possibly a loss depending on the sales expenses to close the sale. If you don't report the sale then the IRS is likely to come asking about it in roughly two years.

 

This is entered as the sale of investment property and can be entered as follows. Inherited property is always considered held long term and any gain will receive special capital gain tax treatment.

 

You can enter an investment sale without a Form 1099-B by using the following steps.

 

  1. Open or continue your return (you can choose the Search box and type 'sale of second home' then use the Jump to link to enter your inherited sale) or follow the menu.
  2. Under Wages & Income scroll to Investments and Savings (1099-B, 1099-INT, 1099-DIV, Crypto)
  3. Answer Yes on the Did you sell any stocks, mutual funds, bonds, or other investments in 2021? screen
    • If you land on the Your investment sales summary screen, select Add More Sales
  4. On the OK, let's start with one investment type screen, select Other, then Continue
  5. On the Tell us more about this sale screen, enter the name of the person or institution that brokered the sale
  6. On the next screen, select  Other then select how you obtained the property select 'I inherited it' under How did you receive this investment? (For TurboTax CD/?Download you can enter a description of the property and holding period.
  7. See images below for assistance.

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