Bare land sold by estate, in Idaho, but not distributed to heirs in other states

[North CAD]

Hi, I am named executor in one of my sisters' estate.  The probate attorney filed and received an EIN from the IRS for tax filing purposes.  Previous  year (2018)  the trust had no income and no property was distributed to any of the heirs listed on the will.  I filed the 1041 with no income. 

Last year (2019) one of the bare land parcels (in Idaho) was sold so that I may catch up on property tax payments for amounts due in arrears and pay other bills related to properties.  Nothing was reported on a K-1 to any of the heirs because the funds are sitting in an account  partly managed by the attorney's office.

There are still amounts due to the probate attorney in my state and one that had to be obtained in Canada.

The balance of the proceeds remaining will probably just barely cover those costs so therefore nothing was distributed to the heirs on any schedules.

  My question is, I suppose,  how is this sale of the bare land treated in regards to the taxes for fed or state?  Do I report the sale as investment income and pay taxes on balance that was not used to pay property taxes or wait until the remaining balance, if any after the attorney's are paid, is distributed?

Thank you,

[Anonymous_ · Accepted solution]

You have to report the sale but, of course, you can subtract the basis from the proceeds and deduct any property taxes actually paid during the tax year.