2021 Sale of Inherited Home

[TaxSeaMacKodiakAK]

I'll try one more time to make sure I am getting this correct. Wife is the executor of her mom's Trust. The house was held by the Trust. There are 5 siblings who inherited the house in the Trust. Mom died in Feb. and house was sold in Aug. The Trust received net sales proceeds and then those proceeds were evenly split between the 5 siblings. So from what I have read and from what you and the other tax experts are saying is we would file this within Investment Income:

Click on Stocks, Mutual Funds, Bonds, Other.

Click on add more sales/ Enter Inherited Home as description, also inherited in date acquired and then enter dollar amounts and click continue. Problem is to get cost basis for back in Feb. 2021.

Click on Done on the next screen not entering any information.

Click No on the next screen then continue.

Click on the first box and enter any extra expenses, which there were.

Click on the next box and enter a positive or negative number depending the amount that the other 4 earned or owed in taxes.

Now the big question, Does All of this information go onto each siblings 1040 exactly the same? 

One last thing, one sister said she talked to her CPA and was told she doesn't have to file this sale on her taxes. 

[DianeW777]

Yes, all of the information goes into each of the sibling returns exactly the same. It is required to be filed on the tax return for all beneficiaries.  The CPA may be thinking of the home sale rules but it does not apply to beneficiaries unless one of them had their name on the title before the death of the decedent.  There are different rules for filing should that be the case.

You indicated there is a 'problem is to get cost basis for back in Feb. 2021'.  You can check the sales of similar property in the same area during February 2021, or check with a realtor for assistance. 

You indicated there were expenses and you clicked the right box. 'Click on the first box and enter any extra expenses, which there were.'

You can enter additional expenses you had for selling the property (only your share). 

@TaxSeaMacKodiakAK

[Edited: 04/05/2022 | 1:45p PST]

[TaxSeaMacKodiakAK]

Appreciate the help. Dealing with wife's siblings who are getting different answers about what to do about filing is frustrating to say the least. No one had a name on the property, belonged to the trust only. I also wanted to be able to quote someone so I could tell the others they all had to input the same info into their taxes filings.  Thanks again.

[TaxSeaMacKodiakAK]

Now I have one of the siblings saying their CPA says that we need to the give them a Schedule K-1 to them for them to do their taxes. If that is true then we would have to buy the Turbotax business edition since that handles trusts and the premier does not create the K-1.

[TaxSeaMacKodiakAK]

Ok, I have to create a K-1 for the other beneficiaries since one's CPA is asking for one. I had to download a copy of the Business edition since for some reason my purchased CD would not load. Here is my situation: Home in Trust of deceased parent was sold in the year she died, 2021.  There is an overall loss on the sale. When I look at the K-1s for the beneficiaries, there are 5, there are the distributions on each but no other no amounts, no tax deduction. I look at the K-1 worksheet and I have amounts in 11A $3,162, 11B $1,237 & 11D  $11,237 but no other amounts in the rest of the worksheet. What am I missing to do or have done wrong that the tax deduction is not transferring to the K-1s to be sent to the beneficiaries?  

[TaxSeaMacKodiakAK]

From my previous question: I just recognized that this creating a carryover loss to 2022. If the sale of the house is split/distributed equally to the beneficiaries how do I get the system to also recognize that the deduction should also be split and distributed to the beneficiaries? Or is this not how this works?

[RobertB4444]

You need to tell the system that this is the final return for the trust.

[TaxSeaMacKodiakAK]

Already made sure that was done in the very beginning. I do know that the software is buggy. As I said, I had to download it since my CD would not load. Kept asking me to load it from the .exe and when I would try it would ask me to do that again. I re-downloaded again today after deleting everything so I could start over clean. Yesterday's download did not ask me, in the beginning, if this was a trust or estate where as today's download did and if you went into edit the info the type of trust was not there yesterday so the system did not know it was a trust, that there was a trustee so it made the fiduciary an executor. Still am not getting anything in the K-1 after reloading all the info which really isn't much. Driving me nuts why it keeps creating a Capital Loss Carryover Worksheet that has a Long-Term capital loss carryover to 2022.

[DrPhrogg]

You are missing the point. This is not your tax return. The return for the estate and your personal return are distinctly separate. Keep them that way. You need an Estate Lawyer.

[DrPhrogg]

I am not a CPA or lawyer. I can only advise based on what we had to do when my father passed.

[DrPhrogg]

Go to the IRS.gov site and you can download it there.

[TaxSeaMacKodiakAK]

Not sure what point you say I am missing. First, we have an estate lawyer but he is not a tax lawyer. Second, I know this is not my return. If you have followed my requests, I have moved on to the Business edition because one sibling's CPA is asking for a K-1. Understand you aren't a CPA but what was in your father's trust and what was in this trust could be miles apart. This has a complex trust, first & final, house sold (selling price/cost basis/expenses), a small loss, small amount of property taxes and distribution of what was left split between 5 people. That's it. Problem is the software doesn't explain what should go into a couple fields at all and what goes into one field changes if data goes on the K-1 or all of the dollar fields are left empty. Tried to talk with Turbo but their people do not know anything at this level.  I'm on yahoo email but for some reason three people tried to send me some kind of info but it never came through to any inbox, spam or trash. Lastly you say go to an IRS site and I can download it there. What is the IT that I'm supposed to download?  Lastly, I'm trying to do this because someone dropped ball in getting this done in a timely manner through a tax person which cannot be done now until after the 18th. Top it off, when we did have a tax person look at this a few days ago they wouldn't without the 1099-S which the realtor forgot to get one to us last year. I had to ask for it and finally got it today.  

[Charles Walz]

1099 S

In December 2008 my wife’s stepmother died. The will included the following provision.

I give all my real estate owned by me at the time of my death…--equally i.e. one third each to my son…, my daughter…, and my step-daughter, ….with the provision that my son and daughter may live in the house as long as they maintain it. However, should two of the three owners agree to sell, then the house may be sold and the net sales proceeds divided equally among the three…

The son and daughter chose to live in the home. In 2021, the son passed away.

The daughter and the person to which she was “legal” guardian and who now lives with her indicated that they wanted the house. My wife and I agreed. We agreed on an amount for my wife. They dealt with a group that did the legal work to which we agreed. On December 21, 2021, my wife signed the paper. Technically, now the “adopted” daughter owns the home. My wife received the 1099 S and an additional paper spelling out how got what and what was paid. How do we file this? I have completed our taxes on Turbo Tax Deluxe, but have not entered this form.

[Vanessa A]

To report the sale of an inherited property, you would enter it by clicking the following:

• Federal
• Income
• Show More next to Investment Income
• Start next to Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B) 
• Then walk through the questions and enter that you sold a property and then answer that it was inherited property.
• Follow the steps to continue through until all information has been entered. 

[Charles Walz]

we have tried to follow. The print preview is now showing two reports of the transaction - one based on the 1099 S figure; the other on the figures from the closing which also show the 1099 S figure.  When I go to that section to try and correct it only one those shows up.