Hi and welcome to JustAnswer:
The 1099-B means that the transaction was classified as a sale. You should have filed a Schedule D with your original return. To resolve this matter with the IRS, you should prepare a proforma amended return which includes the Schedule D including the transaction. Your basis in this sale is the fair market value of the REIT on your father's date of death.
Submit the "amended return" with the notice and a letter and request that the IRS adjust their findings based on this additional information.
You have provide me the info I need. thanks.
I would like to know where it says this in the tax code. I wanted to reference this. I am proceeding without identifing the exact reference section.
Pub. 950 states no taxes for estates under $3.5 Mil. but I cannot locate an exact section.
OK, Again thanks, I am getting the information I need.
But one more thing popped up. Since I must go back to when my father died, the REIT generated income that I believe went into the estate because it was not re-invested into the REIT but used by my father as operationg income before he died.
So as you may guess, I also recieved some cash in FY 2009. So this cash must be listed on the tax form some where. OK, on form 1040 maybe line 28, Other Income. However, the instructionsfor line 28 say "do not report non-taxavle income such as gifts, insurance proceeds, and bequests. So does it need to be lsited elsewhere? I do not see where I can write that off/deduct it off my gross income. I assume Iam OK here because of the instruction of line 28 on IRS form 1040 does not send me anywhere!
Hi Customer -
You do not report the actual inheritance. If the estate earned income, you should receive a K-1 that reports your allocated portion of the income earned.
When you sell assets (like the REIT) or stock you inherited, you will report the gain or loss on the sale. You will also report dividend and interest on securities that are transferred to you as part of your inheritance. Also you will be subject to income tax on all distributions from retirement plans (IRA/401(k)/etc)