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Marvin,EA
Marvin,EA, Enrolled Agent
Category: Tax
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Experience:  Enrolled to Represent Taxpayers Before The IRS
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When my mother-in-law moved to senior living, her house, which

Customer Question

When my mother-in-law moved to senior living, her house, which she owned since the 1950's, was sold in 2008. My wife and her 5 siblings each received $16,800 ($24k minus fees, taxes, etc).   We all then immediately deposited the money in an account for my mother-in-law. The 1099 substitute form shows an amount of $24k+, though we only received the $16.8k and did not keep that.   Are we required to treat the $16.8k or the $24k as capital gains? Can we ignore it as a "nominee"? Can our impact be reduc ed since it was a gift, which was then returned? If it is a capital gain, how do I figure a "basis" on a house that was bought in the '50s for $13,000?
Submitted: 5 years ago.
Category: Tax
Expert:  Marvin,EA replied 5 years ago.

Hello and thanks you for using Just Answer. If your mother-in-law owned the home when the home was sold no capital gain is due on the sale if she lived in the home 2 out of the five years prior to the sale. She would be able to exclude up to $250,000 gain from the sale of the home.

 

Any funds your wife and her 5 siblings received from the sale would be a gift and any taxes due on a gift is paid by the donor.

 

Who own the home when the home was sold?

 

 

Customer: replied 5 years ago.
Marvin:
Thanks for the response. I will certainly be accepting the response but wanted to follow up. I am confirming this, but I believe my wife and her siblings owned the house - there is a 1099s made out to each of the 6 children - so the house was gifted by my mother-in-law to her children, not the proceeds from the house.
Expert:  Marvin,EA replied 5 years ago.
Do you know how long your wife and her siblings owned the house? The house was purchased for $13,000 but did you mother-in-law make any improvements to the house?
Customer: replied 5 years ago.
Yes probably $10,000 to complete the upstairs rooms in the 60's but that is just a guess.
Expert:  Marvin,EA replied 5 years ago.
The basis in the home would be $23,000 and each person should deduct ($3,833 23,000 / 6 = 3,833) plus all expenses from their share of the sale. Any gain is reported as long-term capital gain. Example: If you received $16,800 from the sale of the home you will also subtract $3,833 from the $16,800 and your long-term capital gain will be $12,967.
Marvin,EA, Enrolled Agent
Category: Tax
Satisfied Customers: 1663
Experience: Enrolled to Represent Taxpayers Before The IRS
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Customer: replied 5 years ago.

Thanks - I will try to get the exact numbers and do the calculation like that on Schedule D, I guess.

 

Looks like it would have been way better to have had her sell the house and then give us the proceeds.

 

thanks,

 

Will

Expert:  Marvin,EA replied 5 years ago.

Thanks you for using Just Answer.

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