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Richard
Richard, Tax Attorney
Category: Tax
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The income from the sale of my deceased mothers house must

Customer Question

The income from the sale of my deceased mother's house must be reported to the IRS because it produced more than $600.00( was $50000) and must be probated per IRS using Schedule D with Form 1041. I have added all her savings, CD, insurance death amount, cash & and check balance and filed informal estate closing with the state of Wisconsin She bought the house Oct 1, 1976 and died on January 15, 2012. Purchase cot of house was $25,000.00 I closed out the estate by paying all bills and cost and divided the remaining monies $94,107.39 equally amoung her 8 surviving children. The IRS says that although she come under the $250,000.00 exemption rule(?) for assets it's wise to close out the estate for record purposes like I did with the state of WI. Do I file?
Submitted: 1 year ago.
Category: Tax
Expert:  Richard replied 1 year ago.
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.


Good afternoon. Did you sell the house after your mother's death? Thanks.
Customer: replied 1 year ago.

My computer does not show that you received your requested information so I'm resending.


 


Answer: House was sold after mother's death.

Expert:  Richard replied 1 year ago.
Thanks so much for following up on this; I had not received your response.

Since the house was sold subsequent to your mother's death, there would be no gain on the sale...not because it was her principal residence, but because the basis in the property was increased to its fair market value at death. So, there will be no gain. But, since the title company will have issued a 1099 indicating the sale proceeds, you should file the return to indicate that there was no gain....i.e., you'll report the sales price and the stepped based with the result being zero gain. That will eliminate the issue with the IRS having received the 1099 and later notifying you gain.



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Customer: replied 1 year ago.

 


Since your reply is to file I hope that the correct Forms are IRS Form 1041 and schedule D (Form 1041) which are so completed and I don't see how you show no($ 0) to the estate and is all previous monies that mother had prior to death as it was garnered in previous question box, ie savings, check book cash on hand, insurance(death benefit). I think with a little more imformation I can file to the IRS.


Thank you, Don

Expert:  Richard replied 1 year ago.
You don't have to file a Form 706 with regard to estate taxes; rather, the Form 1041 is simply for income. So, you don't have to worry about all her assets at death. If the only transaction with regard to income is the sale of the house, you simply file the 1041 with the Schedule D to indicate no net taxable income.
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 47093
Experience: 29 years of experience as a tax, real estate, and business attorney.
Richard and other Tax Specialists are ready to help you
Expert:  Richard replied 1 year ago.
Thank you so much for the positive rating! I appreciate having had the opportunity to serve you! If I can be of assistance to you in the future, just look me up and I will be happy to help!
Expert:  Richard replied 1 year ago.
Thank you also for the generous bonus! I appreciate your kindness!

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