Inheritance reporting

[lizard0258]

Hello:

I purchased the Trubotax Premier.  Where do I report an inheritance?  My dad passed in 2018, and left 5 children his home and several condos.  We sold 3 properties under the market value of when he died.  How do I report this? Property values are listed below to include sale price.

Property one value in 2018:  $275,000

Sold in 2020 for: $265,000    Loss: $10,000

Property two value in 2018: $38,000

Sold in 2020 for: $38,000   Loss/Gain: 0

Property three value in 2018: $73,000

Sold in 2020 for: $72,000  Loss: $10,000

[M-MTax]

Who or what owned the properties when you father passed in 2018? Who or what owned the properties when they were sold in 2020? If it was his estate then you need to file a 1041 for the sales and issue K-1s to the beneficiaries. Was a 1099-S issued for each property? If so what tax ID number was on them? Lastly, if the properties had only personal use you can't deduct any losses.

[lizard0258]

Thank you for your reply.  My younger brother is the Executor, and he did not do those steps.  I don't think he knew he had to do so.  My dad passed two years ago so I am not sure if he can go back and file the paperwork but I will let him know.  The property is being divided between 5 siblings and if anything each year we lost money due to assessments, repairs, taxes, and such but I don't think he kept records of expenses either.  It would take time for him to find the paperwork I am sure.  

[macuser_22]

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@lizard0258 wrote:

Thank you for your reply.  My younger brother is the Executor, and he did not do those steps.  I don't think he knew he had to do so.  My dad passed two years ago so I am not sure if he can go back and file the paperwork but I will let him know.  The property is being divided between 5 siblings and if anything each year we lost money due to assessments, repairs, taxes, and such but I don't think he kept records of expenses either.  It would take time for him to find the paperwork I am sure.  

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I would suggest that whoever was the executor or handles the sale of the property seek professional advice immediately from a tax professional that deals with estates (probably a tax attorney).     Failure to file an estate tax return  could make that person  personally responsible unpaid tax.   What needs to be filed depends on the laws of your state so you need a local professional that knows state law.   

Do-it-yourself estates with property, if done incorrectly, can be a costly mistake.

Probably a form 1041 estate tax return and K-1 forms need to be filed.

[M-MTax]

I agree and for your brother's sake get tax/legal pros for this because wrong moves can make him as the executor liable for unpaid tax but also liable to the other beneficiaries for breach of fiduciary duty.