Reporting Sale of inherited home

[SCPM]

I previously posted a question about this, and now that I have entered the information on Turbo Tax premier, I have more questions. My husband's mother passed away on August 2, 2024. He and his 4 siblings inherited the property per her will. The home was sold on December 17, 2024. I used the fmv that I obtained from the realtor (424,000). divided by 5  to account for each of the siblings as the cost basis. The sales price was 400,000. The 1099-S from the closing agent shows 80000.00 to each sibling. This did not include the realtor commission that was paid and other costs associated with the closing of the home per the closing settlement statement. My first question is about why the date of acquisition shows inherited, no date acquired, and shows F long term when the home was owned by my husband and siblings for less than one year. My second question is about the costs associated with the home closing. Do I put that amount in divided by 5, or just not put any costs in? I wouldn't want to end up with a capital loss that is not allowed by the IRS. We live in the state of Tennessee, and we do not have state income tax here. Any help would be appreciated!

[Hal_Al]

Q. My first question is about why the date of acquisition shows inherited, no date acquired, and shows F long term?

A. That is allowed and proper. "Inherited means you don't have to bother with dates and it's automatically long term regardless of the time the heirs owned the property.  Simple answer: that's the rules.

Q. My second question is about the costs associated with the home closing. Do I put that amount in divided by 5?

A. Yes. 

Q. I wouldn't want to end up with a capital loss that is not allowed by the IRS.

A. You are allowed to claim a capital loss on an inherited home, UNLESS there was "personal use" between the time you inherited it and sold it.  "Personal use" would include any other family member living there in the interim.  There are two ways to avoid improperly claiming a capital loss: 1. Show the same number for both sale amount and cost basis  or 2. The interview should give you a question about qualifying for the capital loss deduction. 

[DavidD66]

The reason the "date of acquisition" is "Inherited" is because it was an inherited property.  Inherited property, when sold is treated as long-term, regardless of long it was held.  Using inherited as the acquisition date tells the program and the IRS that the property was inherited, and to treat it as a long term gain.  

For the closing costs and other expenses, you would include seller paid closing costs as adjustment to the proceeds.  You would only enter 20% of the actual costs.  

You can claim a capital loss on the sale of inherited property if all of the following are true:

• The sale was to an unrelated person.
• The house was sold in an arm’s length transaction.
• The property was not used for personal purposes.
• There was no intent by your husband and his siblings to convert the property to personal use before the sale.