Hello, my wife and her sister sold an inherited house from her mother. My wife and her sister each has a 1099-S, each showing half the selling price. For income tax reporting:
1. Would my wife and her sister split evenly of the selling expenses such as sales commissions and title search on the Settlement Statement, since they split the net proceed?
2. Do they each report their own adjustments to step-up cost basis? For instance, if my wife paid for remodeling of kitchen, and her sister paid for remodeling of living room, my wife would add kitchen remodeling cost that she paid to her cost basis on her own tax return, and her sister would add her living room remodeling to her own cost basis on her own tax return?
3. What else can they report as cost basis and expenses to reduce capital gains? Can items such as supplies, and meals, gas for vehicle, airline tickets for traveling back to forth to the house for the repairs and remodeling, getting the house ready for sale, be deducted as expenses?
4. It the total of cost basis and qualified expenses is more than the selling price, can they claim capital loss, or does it stop at zero with no gain and no loss? The house was sitting empty, no one lived in it, from the date of her mother's death to the date it was sold?
4. I read Pub 551 (Basis of Assets - rev 2022), and it doesn't seem to show more detail on what are deductible? What other publications can I read to find out more?
Thank you.
