How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask CGCPA Your Own Question

CGCPA
CGCPA, CPA
Category: Tax
Satisfied Customers: 3742
Experience:  over 40 years experience in tax matters
50756543
Type Your Tax Question Here...
CGCPA is online now
A new question is answered every 9 seconds

This is related to last years question. My sister and I owned

Resolved Question:

This is related to last year's question. My sister and I owned my parent's house as part of an irrevocable Trust. We have now recently sold the house. It was sold at a price that was less than the assessed value. The lawyer that was trustee of my parent will handled the sale and has distributed the net proceeds to the four children in equal amounts. I have 2 questions.

1. Since the house was sold for less than assessed value, I believe that there is no capital gains involved in the sale but that my sister and I will have to acknowledge the sale in our 2010 income tax return. How is that best done?

2. Is the distribution of the proceeds from the house sale, considered inheritance? I don't believe that it is and the only tax liability on that money would be the interest earned if put in a savings account. Is that correct?
Submitted: 4 years ago.
Category: Tax
Expert:  CGCPA replied 4 years ago.

Welcome to Just Answer. I am here to help you resolve your tax and finance concerns. Please feel free to ask anytime you need extra help.

 

The house sales price less certain costs are the basis for any gain or loss calculation not the assessed value. The costs to be added up are: the amount recorded as "cost" within the trust, the expenses of selling the house, and any expenses incurred to render the house saleable.If the property was rented out for any time while it was in the trust you will need to deduct any depreciation that may have been claimed from the basis of the property.This number, along with the sales price, is then divided by the number of individuals who received the net proceeds of the sale. Since the house was inside a trust this gets reported as a capital gain in the Schedule K-1 from the trust to each individual.

 

This is not considered an inheritance since the house was in the trust at the time of sale. That is why the reporting is different. Since the house was also not the main residence of any of the beneficiaries of the trust, you will also not be entitles to the exclusion from the gain of your principal residence and all the gain, offset by any capital losses you may have, will be taxable.

 

If there are other factors you need to question or other facts that were not brought up in your initial question, please provide this.

Customer: replied 4 years ago.
These answers are totally unhelpful and confusing. I have 2 sisters and brother. one sister and myself where the only two in the trust. The house we sold had been in the family for 70 years and we have no basis to subtract cost from other than the selling price.
If we are not use assessed value as a start what should we use?

The distribution to my brother and sister who are not in the trust shouldn't be treated as gain since they were not the owners. They want to know if its an inheritance.
Expert:  CGCPA replied 4 years ago.

The IRS rules specifically state that basis is what is to be used in this calculation, not assessed value. Assessed value is only used for real estate taxation purposes. Sadly the cost is that from 70 years ago which will make almost everything taxable as a long term capital gain.

 

The funds from the sale will only be taxable to the two of you who were included in the trust. The remaining siblings who were not included in the trust can treat their share as an inheritance but the two of you who were in the trust will need to absorb all the taxes on the gain unless the other two chip in towards that.

 

If this is not a satisfactory answer to your mind I will opt out so another person here can tell you the same thing.

CGCPA, CPA
Category: Tax
Satisfied Customers: 3742
Experience: over 40 years experience in tax matters
CGCPA and 2 other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
 
 
 
Chat Now With A Tax Professional
CGCPA
CGCPA
Owner
2585 Satisfied Customers
over 40 years experience in tax matters