Form 8949 Adjustment

[mjwdew]

I am using TurboTax online.  We sold an inherited house last year and have capital gains.  Do I  have to provide supporting documents for the adjustments used increase my cost basis (improvements, real estate fees, etc.)  I know the amounts but don't have receipts for all of the expenses incurred over the last 10 years.

[JohnB5677]

Yes, you must maintain supporting documents, but you do not have to include them when filing your tax return.

• If you don't have receipts, document the circumstance and all of the information you can gather.
• You would have to have this available if the IRS were to question it.

What was the status of the house for the past 10 years

• Did you live in it?
• Did you rent it?
• Was it vacant?

This will affect the way you report the Capital Gain

[mjwdew]

Thank you for responding.

The house was lived in by my Father-in-law's girlfriend (long story!) just so that it would not be vacant.  We maintained it.  She paid us just enough to cover taxes and insurance.  Over the years, we replaced plumbing, fixtures, HVAC, hot water heater and front porch so we were out more than it was valued at the time we inherited it.

[PatriciaV]

Since you didn't report this property as a rental, this is treated as the sale of an inherited property. 

Enter this under Stocks, Cryptocurrency, etc.

1. Add a new investment (at the bottom), choosing "Other" investment type.
2. Enter a description like "Inherited Residence"
3. Type: Second Home or Other
4. Inherited it (important - it's always considered held long term which provides a special tax break)
5. Description: Address is a good choice
6. Date of sale
7. Proceeds from Form 1099-S
8. Fair Market Value (read "Learn More" link)
9. Enter sales expenses (if any)

TurboTax will calculate the gain (if any). You won't report a loss.