Filling out form 8949 for an inherited house

[scocpm]

Hello I need help in filling out form 8949 for an inherited house I received from my mother.

I live in the state of Florida

Mom passed away in August 2022

House sold in January 2023

The house sold for $275,000

house did not have a mortgage was paid for.

The house was vacant until sold.

Mom was sole owner.

I had a day of death appraisal done on August 2022 which was $245,000 

Water heater needed to sell house was $587

settlement costs        $24618

on form 8949 

A- Description of property- I put down address

B- Date acquired - I put Inherited 

C- Date sold 01/27/23

D- Proceeds $275,000

This is where I’m stuck their is 

E-Cost or other Basis

F-Code

G-Amount of Adjustment

H- Gain- $4,795

Question where do I plug in the Appraisal of $245,000

Settlement costs of 24,618

water heater $587

Any information would be grateful 

Peter

[pk]

@scocpm , on going through your post, what I don't see is when did your the decedent pass ( I am sorry for your loss, really ), when did you sell the  property etc. ?   What state are you in ?   When did your father pass and what was the valuation of the ;prop. then ?

Generally what happens  is that  ( depending on the state ) either there is a step up of the half the prop on passing of one parent, and then another step up on the passing of the other parent ( and of course depending on the title holding  verbiage/ type  between the decedents).  So your basis in the prop. would usually be the stepped up value (  i.e. FMV ) --- you need to tell us more of the situation and state .

 So the gain that  you are taxed on  is based on  length of holding, your basis  and the selling price ( LESS sales expenses ,  such as  commission, prep for sales expenses, transfer taxes, title  work etc. ).

Does this make sense ?   

pk

[scocpm]

Mom passed away August 2022

I live in Florida

Father was divorced from mom along time ago still living

mom bought the house by herself along time after they divorced only her name on deed.

Mom bought her house for $79,000 back in 1992.

Day of Death Appraisal was done in August 2022.

Thank you

[pk]

@scocpm , sorry for taking along time to respond-- please forgive. Below I will try cover the  issues:

(a)  First you need to declare this inherited property as a long term transaction i.e. part II of the form 8949.  I am assuming that you are using window's version  of TurboTax and in step-by-step mode

(b) the entries you mentioned in your post  for the cols. (a) through  (c) appears correct. ( i.e. address of property; "inherited";  closing date of the sale.

(c)  col. (d)  would be sales  price  LESS sales commission ,  sales prop cost (e.g.  required repairs, replacement of appliances,  bring up to  code repairs , title search / insurance, transfer tax etc. etc. .

(d) col (e) would be the appraised  Fair Market Value of the asset on the day of  death  of the decedent

(e)  the entries for col ( f) and (g)  are described in great detail on pages 5and 6 of the 8949 instructions for year 2023.  Please follow the instructions.

The instructions for the form, 8949 is the most authoritative answer you will find and one can always  use these as basis  for defense in case of any challenge by the IRS ( although they often will say in any conflict between  instructions  and statute , the statutes win ). 

Is there more I can do for you?

Again please accept my humble apologies for the delay and hope this has not caused too much

inconvenience. 

pk

[scocpm]

Thank you for all these answers most helpful.

have another question I did get a Substitute Form 1099-S Proceeds from Real Estate Transactions

it says gross proceeds of $275,000. Do I put that down anywhere on from 8949?

Or in Box D where is says Proceeds of $275,000 from 1099-S I reduce the Commissions, Title Charges, & required repairs as you mentioned Which the total was $25,205

so, $275,000-$25,205=249,795.     So I would put $249,795 in Box D.

My DOD appraisel(FMV)  was $245,000 that would go in Box E.

My gain would be $4,795 would go in Box H. ?

One last item in Part 2 of form 8949 it shows to check of Box D, E, F. It talks about a 1099-B which I didn’t receive I did receive a 1099-S.  The 1099-S doesn’t show the Basis just the actual proceeds. Not sure if 1099-B & 1099-S are the same when reporting to the IRS. If so, I think I would check off Box E because Basis wasn’t reported? 
Thank you. 

[pk · Accepted solution]

@scocpm , please see page 6 top left  2nd  paragraph of the instruction.    Because  the AUR program tries to match each informational return  ( in your case form 100-S entries ), IRS has to do a roundabout way to allow for  the situation as your where the 1099-S did not allow for  sales  expenses.   So you report the amount shown on 1099-S in col (d) of the 8949, enter code "E" in  col (f) and the adjustment in col . (g) -- in your case this would be the sum of all sales expenses including any transfer taxes .   See page 10 of the instructions.  ( your amount would be a negative  number because these are expenses against  any gain  .  The final and taxable gain shows up in col. (h).

Does this make sense ?

If you need more help, please feel welcome to add to this thread and I will answer ASAP.

If this has satisfied  your need , please consider  accepting the answer  and/or upvote.  And if I have not been able to satisfy you, please tell me what more I can do for you.

pk

[scocpm]

Thank I am understanding what you are saying

The DOD Appraisal $245,000 (FMV) does that go into Box E (Cost or other Basis) 

[pk · Accepted solution]

Yes , Indeed -- that is your basis  ( this is because there is a step-up to FMV of the basis of the decedent -- so your mother's  75K is adjusted up to FMV  -- 245K--- and becomes your basis in the property ).   That is the way  IRS effectively  achieves  NO inheritance tax.

Make sense ?

pk

[scocpm]

Thank you you have been great this has really helped me a lot.