1099-B - TOD Inheritance Funds

[jillburroughs511]

My mother had a TOD account which was split among her 4 kids after her passing in 2016.  The account was split into 4 new accounts and then the 4 new accounts were closed.  This all took place between August 20 and Nov 21, 2016.  The 1099-B form from the investment firm has a summary page and then several detail pages.  The detail pages are a mixture of Short Term-Noncovered, Long Term-Covered and Long Term-Noncovered.  I am able to enter Box 1d and 1e from the summary page but do not know what Sales Category to select.  Boxes 1f and 1g are $0 as well as Box 4 is $0.  Because these are inheritance funds, do I even need to enter this 1099-B?  Do I even owe taxes on these funds which are less than $12k total.  Please advise.  Thank you!  Jill B.

[MiriamF · Accepted solution]

So sorry to hear of your mother's passing.

Inherited property is not taxed until it is sold. Because you got a 1099-B, this property was sold, and you need to report it.

The basis of the property is equal to its worth on the day your mother died. Therefore, the taxable amount should be small relative to the amount of the inheritance.

If you are typing all this in by hand, the summary amounts for long-term and short -term transactions is sufficient. You do not need to enter the individual sales. However, the covered transactions (stocks purchased after 2011, when reporting requirements changed) should be listed separately from the noncovered transactions.

[jillburroughs511]

When you mention "taxable amount" are you referring to the Gain(Loss) column?  The end number isn't even $100.00.  Where do I put these amounts in TT?  TT doesn't ask me to differentiate between Short or Long, or Covered or Non-Covered.  My Short Term-Noncovered is a negative number or loss.  My Long Term Covered and Non-Covered is a positive number or gain.  The statement appears to deduct the negative from the positive and give a combined Total Covered and Non-Covered number that is positive.  Is this final number the number I enter into TT and where?  Also, what Sales Category do I select?  The Long Term – Covered is the majority of the listings, is this what I should select?   Please advise.  Thanks in advance.  Jill B.

[MiriamF]

You will need to upgrade to the Premier edition of TurboTax Online, because the Free Edition was not designed to handle investments.  After you open your tax return, go to the Federal Taxes tab and scroll down to Stocks, Mutual Funds, Bonds, Other. This is where you enter your 1099-B. Although it may seem like it's unfair to have to pay more to report this small amount of money, if you don't, the IRS will assess tax on the full amount of the inheritance. To find the basis of the securities, look up the closing price for each on the date of your mother's passing.

[MiriamF]

Enter the 1099-B exactly as it is reported on your form. After you have entered purchase price, sale price, etc., there is a box for Sale Category. If there is no purchase price, then the sale category is E, long-term noncovered. Click on one of the blue boxes under "If you have additional info..." so that you can write in the Date acquired (your mother's date of passing) and the Cost or other basis. Be sure to check the box for "This item was inherited." Inherited securities are always long-term.