Several questions

Forum|Forum|3 years ago
November 16, 2022
1 reply
6 views

Q1:

My father's date of death was November 2021 and his property was sold on June 2022.

1. Do we need an appraisal to avoid capital gains on the sale?

2. If 'yes' to Q 1, what is the appropriate date of appraisal (date of death or date of sale)?

Q2:

If I have income from contract work but withhold additional money from my regular paycheck, do I need to file quarterly estimated tax payments?

1. If the answer to the original Q is 'yes' do I file for every quarter or only quarters in which I receive payment for contract work?

KochuK

Level 7

Hi cstrassl, thank you attending the event, and posted questions.

Q1. I am very sorry for your loss, very hard to lose a parent.

I wish to point you to IRS Pub 551 Basis of Assets, pages 9-10

quote

The basis of property inherited from a decedent is generally one of the following.

1.The FMV of the property at the date of the individual's death.

2.The FMV on the alternate valuation date if the personal representative for the estate chooses to use alternate valuation. For in-formation on the alternate valuation date, see the Instructions for Form 706.

Unquote

https://www.irs.gov/pub/irs-pdf/p551.pdf

It is always desirable to have an appraisal or proof of comparable value to support the cost basis when reporting the sale. If the real estate market at your location stays constant from time of death to time of sale, you probably have very little capital gain, vice versa.

Q2 that depends.

If your W-2 job payroll withholding is enough to cover 100% of your 2021 tax liability or 90% of tax to be shown on your 2022 tax return, whichever is less, then you won't need to make estimated tax payments, i.e. will not incur "underpayment penalty" if you end up with a large balance due for tax year 2022. Please refer to page 1 General Rule of below link.

https://www.irs.gov/pub/irs-pdf/f1040es.pdf

If you do not want a large balance due when filing tax year 2022 tax, you should estimate your tax liability vs. what has paid in, and make estimated tax payment to cover the difference. This is almost the end of tax year 2022. The last estimated payment due date is 1/17/2023. However, you can effect payment any time now until 1/17/2023.

https://www.irs.gov/payments/direct-pay

Hope the above helps. Thank you.

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