Why does TT count sale of inherited home sold for loss as nondeductible on form 8949?

[brookh]

The inherited property was sold for less than FMV, never occupied, not used to produce income, and was sold to a random/unrelated party shortly after close of probate. TT adds code "F" in column (f) in section II on page 2, which makes the loss nondeductible. Why is the transaction nondeductible? (All research so far seems to indicate the loss is deductible in this situation. How can I make TT fill form 8949 differently??)

[MayaD]

If you selected "Second home," "Land (personal use)," or "Personal items" the loss is not deductible.

In TurboTax you would  report it as investment sale.

1. Since you did not receive a 1099-B, answer “no” to the 1099-B question or select skip Import 
2. Select Other for What type of investment did you sell?
3. Select I inherited for How did you receive this investment? 

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

• The fair market value (FMV) of the property on the date of the decedent's death (whether or not the executor of the estate files an estate tax return (Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return)).
• The FMV of the property on the alternate valuation date, but only if the executor of the estate files an estate tax return (Form 706) and elects to use the alternate valuation on that return. See the Instructions for Form 706.

You can deduct the selling expenses from the gross proceed.

 Sales expenses include:

• commissions
• appraisal fees
• broker's fees
• legal fees
• advertising fees
• home inspection reports
• title insurance
• transfer taxes or fees
• geological surveys
• loan charges (points) or other fees paid on the buyer's behalf
• any fees for a service that helped you sell your home without a broker (listing fees, promotional fliers, etc.)

[brookh]

Thank you for your response.

I received a 1099-S Form, so I entered it in TurboTax that way:

• Income screen > click the "Add investments" button
• "Let's import your tax info" screen: click "Enter a different way" button
• "OK, let's start with one investment type" screen: click "Other"/"1099-S" button [image]

I entered the information requested, which resulted in form 8949 being filled with the "L" code in Part II column (f).

So, are you saying I should have selected "Stocks, Bonds, Mutual Funds"/"1099-B, 3922, 3921" button? 

[MarilynG1 · Accepted solution]

Yes, go in through the Stocks, Bonds, Mutual Funds link and choose Other from the Dropdown list.

This will be reported as an Investment Loss, rather than a loss on the sale of Personal Property (which is not deductible).

You don't actually enter your 1099-S, just the proceeds from it, but save it and record of any other closing costs you incur.

Here's more info on Sale of Inherited Home. 

@brookh 

[brookh]

Thanks for your reply, @MarilynG1.

By entering type of investment = Other (not Second Home) results in the correct filling of form 8949. That did the trick. Thanks!