How to report capital gains in our situation? see details

[Macy522]

I understand we need to fill out a Schedule D to report our Short Term Capital Gains, but I am confused as to how we report it because of this:

For example only:

We purchased a house and farmland (same day) together for 200,000

But then SOLD the house and farm separately months apart.

Sold house in summer for 110,000  

Sold farm in fall for             120,000

Questions:

1. Do you report this as 1 transaction even though then you sold both separately on different dates?

Example:  Report purchase price of 200,000

                   Report sale prices added together of 230,000

OR

2. Do you need to report them as 2 different transactions? (cause there are two different "Sale" dates?

And IF you do, we know what they SOLD for, but how do we divide the original "purchase price" we paid for them together between the two transactions as they were technically bought together as a package?

[Mike9241]

did you receive a 1099-S for each sale?  was the holding period for both short-term? assuming no depreciation was allowed or allowable

a) if you didn't get a 1099-S and the holding period on both sales was short-term just report it as one sale - use the latest sales date

b) if you did get 1099-S and the holding period on both was short-term you should report separately . one way to split the cost is sales price for one divided by sales price for both times the cost

ie 110/230*200

and 120/230*200

c) if one is short-term and one is long-term you can either use method under b) or you get an appraisal of the cost to assign to the first sale. the rest would go to the second sale. 

[Macy522]

I cannot thank you enough for taking the time to explain this. Both are short term, I'm not sure if we will end up getting 1099's yet or not by tax time but now I know what to do with each situation.

In part B of your answer you stated:  

one way to split the cost is sales price for one divided by sales price for both times the cost

ie 110/230*200

and 120/230*200

I was still a bit confused on the math part of that answer.  Can you please explain it in a way I can more easily understand? I'm sorry

[Critter-3]

FYI ... a 1099-S will NOT be mailed to you in January ... you should have them already in the closing paperwork you lugged home from the closing.  

[VolvoGirl]

@Macy522   For the math  you allocate it as......

House is 47.8% of the sales price   (110,000 / 230,000)

Farm is 52.2% of the sales price (120,000 / 230,000)

So you allocate the 200,000 cost as

House is 47.8% of cost is 200,000 x .478 = 95,600

Farms is 52.2% of the cost is 200,000 x .522 = 104,400

Hope that helps

[Macy522]

It does help! Thank you

[Macy522]

One more question, we should fill out a schedule D and 8949 is that correct?

[Macy522]

Just spoke to the lawyer's office, they just said they are still mailing us 1099-S out for both the sale of the house and farm for this tax filing year. Not sure why we did not get them at closing as you stated we should.

[Critter-3]

Very unusual but not against the rules to mail them in January but at least you will know the amount you need to report on the return.  

[Macy522]

Your formula is great, but to be clear before crunching these numbers.

Two additional questions:

1. I assume I use cost basis for what I originally paid for house and land together including fees at closing I paid? Or just straight price of house and farm?

2. When I list the sales proceeds amounts, do I just put the amount I actually received (by check) for the proceeds? Or does the sales amount include fees, closing costs and land taxes I paid listed in the settlement? 

[ThomasM125]

You do include the closing costs in the cost basis. Monies you received at closing for land taxes would not be included in your sale proceeds. If you received money from the buyer to reimburse you for fees at closing, those would wash each other out so that would not be included in your sales proceeds either.

Fees you paid that were not reimbursed by the buyer you can subtract from your sales proceeds.