Sale of inherited land using CD/Download 2020 Deluxe version of TurboTax

For sale of inherited land, TurboTax Deluxe is the version to use.  TurboTax Premier is for people who are renting real estate or selling stocks and bonds.
 

Any profit you gain from the sale of the inherited home becomes capital gains. You need to figure your basis for the home. That is normally the value of the property on the day that the owner of the home died.

Your total basis will be the inherited basis plus the cost of repairs & improvements. 

Here are the steps to enter the sale of the inherited home into TurboTax

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Wages & Income” ("Personal Income" in TurboTax Home & Business)
3. Next click on “I’ll choose what I work on” (jump to full list)
4. Scroll down the screen until to come to the section “Investment Income”
5. Choose “Stocks, Mutual Funds, Bonds, Other” and select “start’ (or “update” is you have already worked on this section)
6. The first screen will ask if you sold any investments during the current tax year (This includes any sale of real property held as an investment property so answer “yes” to this question)
7. Since you did not receive a 1099-B, answer “no” to the 1099-B question
8. Choose type of investment you sold - select everything else
9. Some basic information:
   1. Description –  Usually the address of the property sold
   2. Sales Proceeds – Net proceeds from the sale (on 1099-S amount received for the property) Do not include closing costs here. Instead increase the basis by any allowable closing costs. Please refer to  IRS - figuring basis on property  for information about allowable closing costs.
   3. Date Sold – Date you sold the property (on 1099-S)
10. Tell us how you acquired the property - inheritance
11. Enter the date inherited
12. Enter the your fair market value - Fair Market Value of the property at the time of inheritance plus any capital improvements since inheriting it. (Also, you can increase the basis (FMV) by the allowable closing costs)
13. If you had a loss, on the question of "Did you use this property for business or investment?" If the inherited house was not used for any personal use (no family member lived in it or used it between the time of inheritance and the sale), you will answer that this was for investment.

Mary,

Thanks for the response, but that's not the way it is working for me.  Everything is the same up until number 8 in your response.  After I select "no" to the 1099-B question, TT takes me to screen that says "Tell us about this sale".  Then I have to select ".. enter one sale at time" or ".. enter a summary for each sales category".  I don't ever see numbers 8-13 in your answer.  Ideas?  Should I start clean instead of importing last year's?

You can continuing entering the information starting with the screen Tell us about this sale

• I'll enter one sale at a time

1. Enter Description
2. Date Sold
3. Date acquired
4. Sales proceeds
5. Cost or other basis 
6. Holding period

• Short term (held for less than a year)
• Long term (held for more than a year)

That should record the sell reported on the 1099-S.

I tried that and TT generates a 1099-B Worksheet, a Capital Gain (loss) Adjustments Worksheet, and a Form 8949 (Sales and Other Dispositions of Capital Assets) -- but it does not generate a 1099-S

The program does not generate a 1099-S. It would generate all of the items that you mentioned: the sale on the worksheet, the capitals gains and a Form 8949. 

A 1099-S is a form used to report the sale of land, timber or a house to the person who received the proceeds. The information on that is entered in the program. but not the actual form.

Ok - that makes sense, sort of.  I would have thought I could see a 1099-S after I enter the info, just like I see a W-2, 1099-R, 1099-DIV, 1099-INT, etc. after the info from those is entered.

Nope.  There is not a 1099-S entry screen like there is for all of those other forms you mentioned.   To calculate the gain or loss on land, you need the same information (proceeds, basis, and holding period) you would need for stocks, bonds, and other investments.   So instead of a separate entry field, all of those types of investments use the same generic form.   Any investment not on a 1099-B is entered in that spot.   

Dawn,

Do you know why my version of TT Deluxe doesn't follow what @MaryM428 posted?  

Thanks, David

@DavidRR I am including 2 FAQ's for your reference; one is the Turbo Tax 2020 product guide which outlines the various tax situations that each version supports; the other lists the steps for reporting 1099-S information.

Turbo Tax Online Product Guide

1099-S

You keep talking about an inherited home and how to show it in Turbo Tax, well my 1099 S is for the sale of raw farm land that was inherited and did not have a home on it.  Seems that reporting a home sale would be illogical and wrong.  Solutions?

Yes, you are correct, The farm land would be sold as farm land, not a house.

The question is whether or not the farm land was an active farm and being farmed by the decedent before death and after death by the executor of the estate?

If so, then it is the sale of farm land, business property, not the sale of an inherited house.

The farm land was inherited and I as the executor and majority owner of the land, leased it to a neighbor for cultivation and raising of cattle for a fixed yearly cost.  Lease cost was $1,000 per year, which was far below the normal rate.

The sale of farm land and the sale of an inherited home are reported in the same way in TurboTax - in the Stocks, Mutual Funds, Bonds and Other interview of Invewstment Income.

See Where do I enter the sale of a second home, an inherited home, or land on my 2019 taxes? for detailed instructions based on the type of TurboTax program you are using (Online or CD/Download).

@jimbob48

The link that you gave is of no value that I can tell.  It takes one back to the input of the sales of a home and then refers to a supposed link at the bottom of the page that refers to the sale of inherited land.  That link then takes one back to the original link for the sale of an inherited home.  This is about as clear as mud and very redundant with no clear instructions.  Can you clarify?

A land sale is considered a sale of an investment.  To report this in TurboTax, please follow these steps:

TurboTax Online

1. Click on Federal > Wages & Income
2. In the Investment Income section click on the Start/Revisit box next to Stocks, Mutual Funds, Bonds, Other.  If you have already entered some investment sales, you will see a screen Here's the investment sales info we have so far.  Click on the Add More Sales link. 
3. If you haven't yet entered some investment sales, you will see a screen Did you sell any investments in 20XX?  Click the Yes box.
4. On the screen,  OK, what type of investments did you sell? mark the Other box and click Continue.
5. When you get to the screen, Now we’ll walk you through entering your sale details enter the details of the sale.  You will be able to select the type of investment in the first box [second home, land, etc.]  [See Screenshot #1 below.]
6. Click Continue when done.

TurboTax CD/Download

1. On the Wages & Income screen, in the Investment Income section click on the Start/Revisit box next to Stocks, Mutual Funds, Bonds, Other.  If you have already entered some investment sales, you will see a screen Here's the investment sales info we have so far.  Click on the Add More Sales link. 
2. If you haven't yet entered some investment sales, you will see a screen Did you sell any investments in 20XX?  Click the Yes box.
3. On the screen,  Did you get a 1099-B or brokerage statement... click the No box.
4. On the screen, Tell us about this sale, mark the radio button, I'll enter one sale at a time.
5. Enter the information in the boxes that appear.  You will have to type in Land Sale in box 1a.  For date of acquisition, you can either enter a date or "inherited."  
6. Enter the total sales proceeds as well as the other information requested.  [See Screenshot #2 below.]
7. Continue to the screen, Select any less common adjustments that apply.  
8. Mark the first box The reported sales price did not deduct all fees or selling expenses.  [Screenshot #3]  
9. Enter the sales expenses not deducted from the sales price entered earlier.

Screenshot #1

Screenshot #2

Screenshot #3

@jimbob48

Thank you.  This helped immensely.  I wasn't getting this with the earlier instructions.

So the IRS does not get a copy of the 1099-S that was sent to me with the tax filing, like other 1099's?

The IRS does get a copy of the 1099-S. What kind of sale was the form reporting for you?

@kt38 

A cash sale.  I reported it under investments, as a sale.  Hope that was right.  TurboTax support for use of the software - where in the program to report a 1099-S was of absolutely NO help, a simple question and the agent had no clue even where to look.  I spend hours filtering through online info and hope I got it right.  Very disappointed that TurboTax provides no support for questions that are about a quarter turn off what is easily available.  Not tax regulations related, just how do I use this program! Just don't know what another tax prep options may be.

@kt38  You reported it correctly and in the correct place.  Did you put the value at the date that you inherited the property as the basis for the sale?  That's important.

Thank you