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Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 1822
Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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My husband had a house transferred into his name that belonged

Resolved Question:

My husband had a house transferred into his name that belonged to a disabled man, the disabled man has no income, does not know how to properly take care of himself, and was behind in his taxes. The money from the sale of the house was put on a 1099-S as the Transferor, which is us, but the money went to the disabled man, to find a place to live and have a roof over his head. I was told to treat it as nominee distribution, and I, know it goes on a 8949 and then on a Schedule D, but I am not sure how exactly to do this, so that we are not charged with proceeds, we did not get.
Submitted: 1 year ago.
Category: Tax
Expert:  Anne replied 1 year ago.

Anne :

Hi

Anne :

Thank you for your question

Customer:

Yes

Anne :

When the disabled man "gifted" the home to your husband, did he gift only 1/2 (since he was still living in it) or did he gift the entire home to your husband reserving the right to stay in the home until his death?

Anne :

Also was this gift registered with the proper authorities.....meaning was there a legal contract that was filed through the court system or even just at the local treasurer's office

Customer:

He was losing the home, he did not gift it to us, he was 3 yrs behind in property taxes, and was going to lose it, he moved out into an apartment, we paid the taxes so the house could be sold and he could have the money to live on, get a rented apartment, so on.

Anne :

ok......bear with me just a few minutes while I ask some more questions..........I want to be sure I advise you correctly

Anne :

You mentioned the home was transferred into your husband's name.........where was that recorded?

Customer:

yes, it was all done legally, quick claimed through the county recorder's office

Anne :

so for all intents and purposes, your husband had exclusive ownership, correct?

Customer:

Clark County Recorder's office in Las Vegas, Nevada

Customer:

Correct

Anne :

I totally get that you and your husband did this to help out a friend.......unfortunately, that quick claim deed made your husband the legal owner of the home

Anne :

give me just a second to look something up please

Anne :

A quitclaim deed is a written document that transfers the title (ownership) of real property such as a home or piece of land

Anne :

Unfortunately, your husband was the owner of the property at the time it sold

Customer:

what about nominee distribution

Anne :

bear with me a moment or 2 longer please..............although I know the answer, I try to give my clients here some proof in black and white

Customer:

are you still there, just checking

Anne :

 


When property is quitclaimed to you, your tax basis is the amount the owner paid for the property, plus any improvements made, plus the taxes you paid. You should be able to find this infomration on the quit claim deed itself. . If you later sell the property, you'd have to pay tax on all the profit that exceeds his purchase price (with some adjustments for improvements and the like).

Anne :

Since your husband owned the property, you may not nominee the profit to the original owner

Anne :

You may only nominee if the other party still has ownership

Anne :

How much did the home sale for above and beyond your basis in the property

Customer:

what if an improvement was done on the property years ago but we can't find the original paperwork on it

Anne :

I would still add that to the basis

Customer:

we only had the property for 3 mos

Customer:

it was empty tip it was sold

Anne :

If the IRS does ever ask for the documentation, I'm sure SOMEONE will remember seeing the company name on a truck, etc. and you should be able to verify that through the contractor's records

Customer:

the original cost of the home years ago was 21,650

Anne :

and the cost of the improvements(roughly)

Anne :

plus your 3 years worth of taxes you paid

Customer:

15,000 a new addition on to the house

Customer:

plus 7,617.96 in settlement charges, and 3,483.59 in taxes paid

Anne :

ok.................and how much will you realize in profit in the sale

Anne :

what did you sell the house for?

Customer:

65,989.00 gross proceeds not minus any of the above

Anne :

So your husband received the check minus the expenses in his name, correct?

Customer:

yes he received the check- only the 7,617.96 settlement charges taken out which left a total of 58,378.49

Anne :

So on paper anyway, he will show a short term gain of $18,244

Anne :

I understand I'm not telling you anything you want to hear

Anne :

Did your husband immediately turn over all of the proceeds to the original owner, keeping nothing for himself to pay the tax with?

Customer:

no, he held back 15,000 just in case there was taxes,

Anne :

smart man

Customer:

not really- he should have put in a power of attorney

Anne :

I am looking up one more thing...........I want to leave "no stone unturned " as they say

Customer:

cool

Anne :

I'm sorry................I was sooooooo hoping to find something different than what I had told you (like some obscure IRS law ) but I can't find anything that changes my answer

Anne :

At the time of the sale, your husband legally owned the property (assuming your friend had 100% ownership, meaning he did not leave a % to his children or anything)

Customer:

he was an only child

Customer:

he is like a child

Anne :

That means that since your husband was the legal owner of record, then he must report, and pay tax on the sale

Anne :

I'm sorry to hear that...........and God bless you and your husband for helping him

Customer:

okay- so do you know about the forms

Anne :

Yes, you will file the 8949 as a SHORT TERM transaction

Anne :

Then whatever program you're using SHOULD carry that to Schedule d

Customer:

so all of the expenses go in column e and I minus that from d

Anne :

hold on..........its a new form, and I haven't memorized it yeat

Customer:

and put total in h

Customer:

can we treat any of that gross as a gift to him

Anne :

it wouldn't gain you anyrthing, you can't deduct gifts.......

Anne :

ok.........I have the 8949 in front of me now

Customer:

this was kind of a complicated question,scenario or it seems like it

Anne :

You would check box 3 in section 1

Anne :

sorry box C

Customer:

even though it is reported on a 1099-s

Customer:

it would not be box b

Customer:

just asking

Anne :

Yes, because it's a 1099S, Not a 1099B

Anne :

I want you to ask any questions you have..........that

Anne :

that's what I'm here for.............even though my typing skills are less than perfect this time of night..............lol

Anne :

I want to look up box f for you

Customer:

you are doing great and I appreciate it

Anne :

Box F you should enter "E"

Customer:

in the instructions for 8949,page5, third box down, that does not apply to us?

Anne :

and here's the link

Anne :

http://www.irs.gov/instructions/i8949/ch02.html#d0e482

Anne :

Let me look

Customer:

box f I enter e for expenses and G I put in amount of expenses

Anne :

I was shortcutting the instructions because I only asked for what I needed

Anne :

let me check the real instructions

Customer:

what goes in box e then

Anne :

ok.....lets walk through the 8949 form real quick, ok?

Anne :

Part I.......you mark box C

Anne :

still staying in part 1 (for short term sale)

Anne :

boxes, a, b, c, d should be no problem

Anne :

Box f code is "E", and if you bring up the link I provided above it will tell you why you need to enter "E" in that box

Anne :

Box "g" is 0

Anne :

I think that should pretty well cover the form 8949 for ou

Anne :

You

Anne :

geesh

Anne :

You may bookmark this page and come back and ask follow up questions even after you rate and pay

Anne :

Did I miss anything on the 8949 form that you may still have a question on?

Customer:

so the expenses go where

Customer:

would the cost basis and the improvement go in column e

Customer:

f is e

Customer:

expenses go in column g

Customer:

as a negative and then subtract e from d and then g subtract and gives me total gain in h

Anne :

Column d is proceeds from the sale..............you need to match the 1099S....so you will need to know if the 1099S already has the realtor's cost subtracted on the 1099S form

Customer:

it doesn't

Anne :

ok, then you get to add that cost to the basis of the property

Anne :

When you're done, your answer should be around $18244

Customer:

so nothing goes in column g, even though I have a code in column f

Anne :

that's correct

Anne :

adjustments would be things like depreciation

Anne :

and I don't think from the sounds of things that your neighbor ever rented that house out

Customer:

no

Anne :

then column g is blank

Anne :

Is there anything else I can help you with tonight?

Customer:

No, I don't believe so. So the original cost and all expenses go in column e

Anne :

yes.........and don't forget the taxes you paid plus the addition to the home

Anne :

and the realtor fee

Customer:

I was just looking at the top of column f and g and it states "if" you enter an amount in column g then enter a code in column f

Customer:

I will not be entering anything in g so therefore why am I putting an e in the f column- just asking

Anne :

Good question

Anne :

I'm double checking

Anne :

My hat

Customer:

Sorry I kept you on your toes at this late time at night, have to get this to them quickly and have been stuck on this for 2 weeks trying to get an answer

Anne :

My hat's off to you....you would not enter anything on f or g

Anne :

that's fine.............there are times I need to be kept on my toes

Customer:

okay- thank you very much Anne- you have been very kind and patient

Anne :

Thank you.....please feel free to ask for me by name if i can help you in the future

Customer:

even though I don't like being calledCustomer/p>

Customer:

just by asking for Anne

Anne :

lol I can understand that, but I've seen some strange names here

Anne :

just put "for Anne" in the question bar

Customer:

okay- thanks again

Anne :

You're most welcome

Customer:

good night

Anne :

good night to you too.........I hope this converstion will help you sleep better

Customer:

You have been a tremendous help, very kind, now hopefully we don't have to owe anything and pay penalties

Customer:

We lost our youngest daughter April 16th and I had to file an extension

Anne :

Oh............I'm so sorry

Customer:

did not expect this situation, it was a surprise

Anne :

Parents should NEVER have to bury a child

Anne :

its against the universe

Customer:

with the capital gains I mean as well as our loss of our daughter

Customer:

so any kindness is extra appreciated at this time

Customer:

thanks

Anne :

Honey, you're having a bad year...............and I don't pretend to know how it feels

Anne :

but....I do have a philosophy I live by

Anne :

"This too shall pass"

Anne :

That way I remind myself to savor all of the good memories.........because they too will pass

Customer:

okay, so do I click now on the excellent face

Customer:

yes- the good memories

Anne :

sure...........but if you want to come back ....all follow up questions are free...........and if you want to talk about your daughter.....I'm a good listener

Customer:

thanks, XXXXX XXXXX

Anne :

comes from growing up with 2 child psychologists

Anne :

family dinners were so much fun

Anne :

lol

Customer:

I could imagine

Anne :

Please.............put this in your book marks and let me know how you're doing from time to time, ok?

Customer:

How come I can't click on the faces

Anne :

I honestly don't know.............I've never seen the customer side

Anne :

WAIT I KNOW

Anne :

I had clicked a box I shouldn

Anne :

tshouldn't have

Anne :

didn't realize it

Customer:

When I try to click on the rating it says you haven't finished answering yet

Anne :

try now

Customer:

okay, there it is, lol

Anne :

my fault...sorry

Customer:

no worries- ok I will click, and I think I have you bokkmarked

Customer:

bookmarked

Customer:

so I will let you go, thanks again

Anne :

if you post back to this thread, they won't charge you.............and I'm just a computer stroke away

Customer:

not understanding

Anne :

you can ask all of the "follow up" questions you want to at no further charge......so the computer will think you have follow up questions if you book mark this and come back to this thread
"

Customer:

I see, thanks for the info

Customer:

very pleasant talking with you

Anne :

you too...............hang in there

Customer:

Oh by all means

Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 1822
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
Anne and 7 other Tax Specialists are ready to help you
Expert:  Anne replied 1 year ago.
Thank you for the accept and the excellent rating!

Please put "for Anne" in your question line if I can help you in the future.

I'll be thinking about you.....even if we never speak again..........I want you to know that I am in awe of your strength.....bless you

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