sale of our house which was in our revocable living trust

[richardR1]

My wife and I sold our house in Virginia . The escrow agent divided up the sale into 2 halves for each spouse and sent us each  1099-s. With  each social security number.

Combined we are still under the 500K capital gains. When reporting these 1099-s, since we are filing jointly do we report the total sale or do we have to insert 1/2 of the sale for each spouse into turbo tax. which should amount to the same.

Its weird as the house was jointly owned by both of us and so listed in our deed which place the house in a trusat.

I just hope its not a taxable issue with a 250K cap when marries filing jointly its a 500K limit (we satisfy all other terms).

do we have a rogue escrow agent as i pushed hard for 1 1099 and they pushed hard back that it had to be 2.

[M-MTax]

Grantor trusts qualify for the full exclusion per Section 1.121-1(c)(3)

See https://www.law.cornell.edu/cfr/text/26/1.121-1

[Mike9241]

Good question, probably with no absolutely right answer. I would suggest reporting as a single transaction. All the IRS will do, in theory, is tie out total proceeds reported to the total of the forms it gets rather than individually. 

[richardR1]

That is what chat gpt indicated as well

[M-MTax]

Yeah, I don't think this is a close call, not by a long stretch, and there's an absolutely definitive answer.

If you're married and filing a joint return (and meet the qualifications of course), then you're entitled to the $500,000 exclusion of gain (despite how the 1099-S reports it).

See https://www.law.cornell.edu/uscode/text/26/121

(2) Special rules for joint returns

In the case of a husband and wife who make a joint return for the taxable year of the sale or exchange of the property—

A) $500,000 Limitation for certain joint returns Paragraph (1) shall be applied by substituting “$500,000” for “$250,000” if—

(i) either spouse meets the ownership requirements of subsection (a) with respect to such property;

(ii) both spouses meet the use requirements of subsection (a) with respect to such property; and

(iii) neither spouse is ineligible for the benefits of subsection (a) with respect to such property by reason of paragraph (3).