Hello and thank you for using Just Answer,Yes, unless your father used the property as his personal residence he would need to report the sale (for federal and state).Of course your father and brother would need to show only their own portion if cost and sales price. Each would only have gain if their portion of cost is less than the sale.
So the cost was $703,000 and sold for $740,000. This would would mean that $37,000 is the gain.
How they split the ownership percentage would determine each of their true gain from the $37000. If it was a 50% split then They each have a $18,500 gain that would be reported.
Your father being a nonresident of California would need to report as a nonresident. His federal return should have already shown this sale and gain.
If not, he does not need an attorney, he needs to amend his federal return for the year of sale and complete a California nonresident return to show his correct amount of tax due.
They did not look at basis
They took the sales price and that was it.....
If your father had filed the state would have known what his basis was, they just used $0
He needs to have a tax professional complete the CA nonresident return
Send it to the address on the notice with a statement saying he disagrees with their assessment based on his true gain.
If he did not report this sale on his federal, he needs to amend.
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