Inherited house yields short term gain

[bhowe]

Short story, I inherited a house and sold it. The FMV was aroung $240k the sell was at $222k. I should have a new loss. Turbo Tax Business is showing a $201k short term gain. Where should I look for the mistake? Should I just start over? 

[HelenC12]

Personal losses are not deductible.

• If you held the inherited home for investment purposes, the loss would be deductible.
• See What's the difference between investment property and personal-use property?

Yes, delete the information you entered and start over using these instructions:  Where do I enter the sale of a second home, an inherited home, or land on my 2019 taxes?

[bhowe]

I received a 1099S for the inherited property. I was told I have to do an Estate of tax return using TT Business to create a K1 form and then apply that to my personal taxes. This seems to differ from your approach? 

[Anonymous]

did you get the property directly, the filing an estate return for this is wrong.,   for acquisition date enter inherited and it should result in long term gain

[bhowe]

I started over, created a new Estate Tax Return. I made sure the house wasn't listed as a investment. The K1 that generated has all blank fields. I don't think that is correct either. 

I have to say, the estate portion of the software doesn't guide you thru the process very well. What is the "Home Sale WKS" used for? There was no walk thru on this. I believe this is where I list improvements required by home inspection and the FMV of the house? 

 Thanks for your time

Bill

[RobertG]

An estate return, Form 1041, has a place to enter Home Sales in the income section. 

It asks you if the home was used for personal purposes, and if it was used for investment. 

When you report a home sale there it will create a Home Sale Worksheet.  

If it is sold at a loss, there will be no reportable gain or loss, so it will not flow through to the K-1.

If you have no 1099-S, you do not need to report it if you file the 1041. 

If you do have a 1099-S in your name, you should report it on your personal return as suggested by HelenC12 above.

[bhowe]

"If it is sold at a loss, there will be no reportable gain or loss, so it will not flow through to the K-1."

It was sold as a loss. I did receive a 1099S made out to the estate. If I understand correctly, I file the estate tax 1041 and report nothing on my personal taxes. Is that correct? 

The home wasn't for a business gain/loss so no K1 on my personal taxes. I just want to make sure.

Thanks

Bill

[DianeC958]

There is nothing to report on your personal return if the estate did not distribute the gain or loss to the beneficiaries of the estate.

You can take a loss as a deduction on an inherited house, the estate would need to distribute this loss to the beneficiaries for the amount to show on the K-1.  You can retain the items and deductions in the estate and pay any tax due at the estate level or you can distribute the  income and deductions to the beneficiaries.

If you switch to the forms mode (in the upper right hand corner) and look at the list of forms on the left, click on Dist Inc K-1.  On this form you can add the information to distribute the loss on the sale of the house to the beneficiaries.

About Form 1041, U.S. Income Tax Return for Estates and Trusts

@bhowe