Jax Tax : This is real simple as the actual deed means nothing. Each of the 5 persons will report of sch D their share of the basis and sale price. This will create a mismatch between the 1099s and the sales price listed on the 1040 of each, but a small annotation explaining will suffice. Customer:
I don't totally understand. How will the annotation tie the income reported on the 4 1099
Jax Tax : I have a better idea.
Jax Tax : Each of the four persons can simply file 1/4 of the transaction then each of the 4 listed owners can gift 1/4 of the 5th persons net share. So long as the payment from each of the 4 listed owners does not exceed $13k each, the gift is not reported or taxed.
Jax Tax : As for the initial question, you would simply list less than hat is reported on the 1099 on the sch D. The explanation will explain why less is reported. This would be fine. Otherwise, ask the closing firm to report to all five.
the closing firm will be required to distribute the money per the title
Jax Tax : All and all, this can be dealt with easily. If there is a 5th owner, simply report on sch D only 1/5 with a written explanation on the 4 listed owner's returns why the proceeds listed are less than the 1099 or report it 1/4 each and gift the.funds to the 5th party.
Jax Tax : The distribution of the money is of no consequence. You can deal with it privately and report it as such.
the amount will be greater than 65K from each of the 4 receiving heirs
I thought that possibly that by declaring capital gains by nominee would generate the necessary 1099s for the 5th heir
Jax Tax : OK. Why then was the property inherited by 5 people but only titled to 4?
The correct will dictated such
the state of Ma., because of the wrong will that was filed, only title the 4
Jax Tax : So the best way is to report the sale 1/4 to each titled owner. Then the gift exceeding $13k will be reported on form 709 from each of the 4 owners. There is still no tax, bit the 5 million lifetime exclusion is reduced by the amount that each.of the 4 gift to the 5th over $13k. Just one extra form on the 1040. No tax to anyone.
Jax Tax : Any preparer can handle it.
I just lost your last entry
Jax Tax : It is saved in the chat. This is the best way given the circumstances. You can still opt to report 1/5 on each return with a written explanation as to why the entire 1099 is not reported and the information of the 5th person reporting. Ill change the format to make it easier to see.