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Richard
Richard, Tax Attorney
Category: Tax
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Experience:  29 years of experience as a tax, real estate, and business attorney.
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My wife and her sister inherited a home from her mother in

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My wife and her sister inherited a home from her mother in November 2009 and sold the home in February 2010 for about $120,000 and my wife received half. The real estate company turned in a 1099-S to the IRS. Is this taxable income? Her total inheritance was below $500,000 including this property.

Thanks,
Gordon

Good morning. No. When your mother died, the basis in the property was stepped up to its fair market value. Thus, when you sold it for its fair market value, there was no taxable gain....your share of proceeds: $120,000; your basis in that share of proceeds: $120,000; gain on sale is $0 and thus no tax. You would report this on Schedule D.

 

 

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Customer: replied 5 years ago.
In Schedule D, is this considered a Short Term Capital Asset [Part I] (we had it for just 4 months) or Long Term Asset [Part II]? With the sales price and cost basis the same, should the description field include the fact that it was inherited property due to death?
It would be long term..you get to include your mother's holding period. You need only give a description of the actual property. You need not include any additional information.
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