Miscellaneous Income

Forum|Forum|3 years ago
April 10, 2023
2 replies
23 views

In October 2022, I sold an antique desk, which I'd inherited years ago, for $250 (cash). Do I need to claim that as income on my 2022 taxes, and if so, where do I enter the amount?

GeorgeM777

Level 11

Perhaps, but maybe not the full $250. When you inherit property, the value of the inherited property, in this case an antique desk, is the fair market value as of the date of the decedent's death. This is what is called a "stepped up" basis. In other words, the value of the antique desk on the date of the decedent's death is your basis or cost. When you sell inherited property for an amount greater than its cost, you have a gain and need to report that gain. Thus, if the FMV of the desk you inherited was $0, then you would report the $250 you received.

If you sold the desk for less than what it's worth, you don't get to deduct that loss. The exception would be if the desk was investment property or business property. In that case, selling the desk at a loss would be a deductible loss. But when it's just personal property, losses are not deductible, but gains are reported as capital gain income.

@beilime

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Opus 17

Level 15

The sale of tangible personal property is considered a capital gain or capital loss. You have a capital gain if you sold the property for more than the cost basis. The cost basis for inherited property is the fair market value on the date the previous owner passed away. Your capital gain would be taxable income, not the whole proceeds but the gain--the difference between selling price and cost basis. You may want to consult with an antique dealer or a published reference guide to see what the fair market value was on the date of the previous owner's death.

If you don't have a gain, you don't have to report the sale at all. If you have a loss (you sold for less than the fair market value on the date of the previous owner's death), you don't report it either because losses on the sale of personal property are not deductible.

In the unlikely event you are audited, the IRS could determine the entire proceeds are taxable if you can't produce a reasonable estimate of the cost basis. You should make a written record that describes the desk, how and when you acquired it, and how you estimated the cost basis.