sale of inherited home and 1099s in separate years

Previous | Next
 rated by 0 users
Latest post 03-26-2010 1:28 PM by Drew. 5 replies.
  • 03-25-2010 8:16 PM

    • CatPay
      Consumer
    • Not Ranked
    • Joined on 03-26-2010
    • VA
    • Posts 3

    sale of inherited home and 1099s in separate years

    My father inherited his parents' home in 1975 upon his father's death. It was sold in 2009 for a capital loss. My dad was 1 of 8 siblings who equally inherited the home. One of the siblings, my dad's brother, died in 2006 with no will, spouse or children. His share is being split among the surviving 7 siblings. We received the 1099-s for the sale of the house as a 2009 form, and figured out how to file it on a Schedule D. Since the FMV of the house was more than what it was sold for, my dad reported a capital loss and owes no taxes for it. However, my uncle's estate and his portion of the sale proceeds were not distributed until 2010. So how do we file the 2010 1099-s form? Will my dad owe taxes on this portion? On what form do I report the 1099-s?

  • 03-25-2010 8:28 PM In reply to

    Re: sale of inherited home and 1099s in separate years

    CatPay:
    Since the FMV of the house was more than what it was sold for...

    A clarifying question first.

    The FMV at what point in time?

    While it is possible, it is tough to believe that the property did not increase in value over 35 years.

     

  • 03-25-2010 8:31 PM In reply to

    • CatPay
      Consumer
    • Not Ranked
    • Joined on 03-26-2010
    • VA
    • Posts 3

    Re: sale of inherited home and 1099s in separate years

    We had to sell at a loss, FMV 1975 was $75000, sale price was $22,500. Property needed ALOT of work, had fallen into disrepair, sold to renovated it and flipped it for $90,000.

  • 03-25-2010 11:51 PM In reply to

    Re: sale of inherited home and 1099s in separate years

    CatPay:
    My father inherited his parents' home in 1975 upon his father's death. It was sold in 2009 for a capital loss. My dad was 1 of 8 siblings who equally inherited the home. One of the siblings, my dad's brother, died in 2006 with no will, spouse or children. His share is being split among the surviving 7 siblings. We received the 1099-s for the sale of the house as a 2009 form, and figured out how to file it on a Schedule D. Since the FMV of the house was more than what it was sold for, my dad reported a capital loss and owes no taxes for it. However, my uncle's estate and his portion of the sale proceeds were not distributed until 2010. So how do we file the 2010 1099-s form? Will my dad owe taxes on this portion? On what form do I report the 1099-s? We had to sell at a loss, FMV 1975 was $75000, sale price was $22,500. Property needed ALOT of work, had fallen into disrepair, sold to renovated it and flipped it for $90,000.

    From the information you posted, this was not done correctly. The sale of the home should have been reported on everyone's tax return (including the estate) for the year the house sold. There should not be a 1099-S for 2010. If the 8 siblings owned the home together as tenants in common, then the deceased brother's share passed to his estate. From what you posted that is what happened here. The estate apparently still owned his share in 2009 when the home sold. There should simply have been one set of 1099-S forms issued for 2009 because that is the year that the house sold, not 2010.

    The estate's basis in your deceased uncle's share of the property would be 1/8 of the fair market value (FMV) of the home on the date the uncle died in 2006. The estate's gain or loss on the sale would be the difference between the estate's 1/8 share of the sales price in 2009 less that FMV of his share from 2006. That probably means that the estate's gain or loss on this property was not all that much. The estate reports that gain or loss on its income tax return (Form 1041) for the tax year that covers the date of the sale. If the estate uses a calendar year, that would be a return ending 12/2009. Depending on the situation, the gain/loss may pass up to the estate beneficiaries. That will be shown on the Forms K-1 that the estate files with the return. A copy of the K-1 then goes to each beneficiary to aid them in completing their individual returns. The K-1 contains the instructions of where everything goes.

    I suggest the estate executor see a tax attorney or other tax professional familiar with the income taxation of estates to get this fixed.

  • 03-26-2010 6:34 AM In reply to

    • CatPay
      Consumer
    • Not Ranked
    • Joined on 03-26-2010
    • VA
    • Posts 3

    Re: sale of inherited home and 1099s in separate years

    I think the lawyer's office was originally going to distribute my uncle's share on 1099s dated 2009, but my dad was worried about his other siblings having already filed their taxes for 2009 and how would it all be handled. So the lawyer's office said they checked and found out they could distribute the money on 2010 1099s. However, I'm not sure that this has actually happened yet. My dad says this when I told him that I didn't know how to handle the 2010 1099s on his taxes next year:

        I believe that we'll be able to consider his estate s... alone. Where his money came from should really be immaterial. I may have to file a tax return for his estate, because there is a 1099s in my file for his share. The date of closing (01/29/09) is the only date listed on his 1099s so that indicates it became "his" on that date (01/23/09). The 1099 was sent c/o me as his Administrator. The lawyer also sent all of the estate checks to me as well. I'm pretty sure Paul's share was paid to his estate in Jan 09'. Even if control over Paul's share was held up by being in escrow, it would became "his" when it was released to the estate.  Where his money came from, would have nothing to do with settling HIS Estate.   I will contact the Office of Fiduciary Supervisor where I signed to be Fiduciary for his Estate and If I have to, I can set up an appointment to see her, but I should not have to. We only need to know what date custody transferred to his Estate. If  the date of transfer was the same as ours, we can handle it like any other income,after all, the tax on $225 cannot be to much.  She can also advise me of what else I need to do to close his estate. We have until April of 2011 to figure it out anyway.
    Does your advice still stand? Sorry, this is incredibly confusing to me, and I have learned from this that I need to make sure what I leave to my son and how he needs to handle it is completely understood by him!
     
  • 03-26-2010 1:28 PM In reply to

    • Drew
      Consumer
    • Top 10 Contributor
    • Joined on 03-30-2000
    • PA
    • Posts 49,519

    Re: sale of inherited home and 1099s in separate years

    You need to go back and check if the capital loss is deductible! Not clear if Dad tried to deduct a loss.

    Zero income is correct for loss on sale of personal property.

    IF the property was held for investment or income purposes then a capital loss on same is likley deductible.

    If it just sat there for 34 years it may be hard to say it was held for investment purposes!

     



Page 1 of 1 (6 items) | RSS

My Community

Community Membership New Users: Search Community