Estate sold vs capital gain

[LB641]

Our father passed away, leaving his home to be sold and then divided equally between my sister and I. The house was sold by the estate trustee. Since we did not take ownership in the form of a deed, do we owe capital gains on the sale of his house, or does the estate pay the taxes, and we inherit, free of taxes, the proceeds of the sale?  Thank You

[tagteam]

---

@LB641 wrote:

Our father passed away, leaving his home to be sold and then divided equally between my sister and I. The house was sold by the estate trustee.

---

You should contact the administrator of the estate (or executor if there was a will) (or the trustee if the home was in a trust).

If you did not receive a K-1 (1041) from the estate (or trust), then it is likely that there was either no gain for you to report on the sale or the estate (or trust) paid any tax due (if there was gain).

[LB641]

Not sure I fully understand that. I guess what I am asking, is as the home was sold by the trustee, and since my sibling and I never took ownership in the form of a deed, are we responsible to report it as a capital gain? If the house was sold by the trustee, and then the money equally divided as an inheritance, is there anything to claim or report?

[tagteam · Accepted solution]

If there was a gain on the sale, tax was due, and the trust paid all of that tax, then you and your sibling will not have any federal income tax liability.

On the other hand, if there was a gain on the sale, tax was due, but the trust did not pay the tax due, then you are likely to get a K-1 (1041) showing the gain on the sale (which you would report on your individual income tax return).

You can contact the trustee for information as to the selling price, cost basis, and whether tax was paid by the trust and whether you will be receiving a K-1. 

There is also a chance that there was no gain on the sale, in which case neither the trust, nor you or your sibling would have any tax liability.

[LB641]

Thank.... so if the trust/estate paid the taxes for the sale - as they should have - and all my sibling and I received is the resulting inheritance divided equally, we would not claim a capital gains tax. thanks 

[LB641]

Perhaps you can help with understanding the "sale" of assets, when selling the rental home. Assets include the home itself, the roof, appliances, fencing, etc. In reporting the sale, I need to report the "sale" of the assets too. Most sale for at least $1.00. These assets in some cases are 10 - 12 years old. Do I enter the original cost of these items, + $1?  Trying to wrap my head around how the IR S, or anyone else, including the buyer, would believe that I could sell these items/assets, at full price (original cost) back 10+ years ago. Then add a $1.  Thanks - Just want to enter the data correctly, and stay off the IR S-radar.    Thanks

[tagteam]

@LB641 

No matter how you handle this scenario (and there is more than one method), you simply have to account for all of the depreciation deductions you have taken on all of the depreciable property you sold.

You most likely have one, total sales price and you can add all of the accumulated depreciation on the assets that were included in the sale. Actually, all the IRS is concerned with is that the total depreciation on everything is reported as subject to potential recapture.

[JohnH1]

If YOU did not sell anything then YOU have nothing to report . . . It all goes on your fathers estate tax filing.