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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16576
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Hello, Ive recently received $33,000 in inheritance money.

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Hello,

I've recently received $33,000 in inheritance money. This money came from a sale of our (myself & 2 other siblings) share in a family property. We own a third (becaude my father passed away we inherited his portion, he also has two siblings). So, the net sales price of our one-third interest in the property was $99,000. This was sold to my aunt and uncle, now making them the sole owners of the property. I am the executor and must pay out myself and siblings one-third of $99,000 ($33,000). I have the check and will deposit it. Do I have to withhold or pay any taxes on this money?

Megan C :

Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

Megan C :

How are you today?

Megan C :

When you inherited the family property, your basis in that property is the fair market value at the date of the death of your relative.

Megan C :

You will owe tax to the extent that the selling price exceeded the basis in the property

Megan C :

So, if you sold it for the fair market value at the date of death or less, there's no tax.

Megan C :

If you sold it for more, then there is tax but only to the extent that the selling price exceeded the basis

Megan C :

There's no withholding required by the executor

Megan C :

If there is a gain, each sibling will only have to pay tax on their portion of the gain

Megan C :

I'm sorry to hear of the loss of your father, by the way.

Megan C :

Let's go through an example. Say the property appraised for $300,000 at the date of your father's death. His 1/3 interest is worth $100,000 - so $100,000 is your basis in the property. You sold it for $99,000 so there's a loss of $1,000. Each sibling will claim $333 of capital loss on their tax return

Customer:

So I need to know the fair market value when my grandparents originally purchased the home?

Megan C :

No, you need to know the fair market value at the date of the death of your father.

Customer:

Ok, thanks! That does help. Just in case who can come after us for that information? Will I need to list it on my tax filings?

Customer:

Thanks for your condolences!

Megan C :

The IRS may ask for that information. You will list the FMV of your portion of the transaction on your tax return on form 8949 and schedule D

Megan C :

Those are the forms where you report the gain/loss on this transaction

Customer:

Great, thanks! this service was very helpful.

Megan C :

You're welcome. If you would, please rate my response as "excellent" so that I may receive credit for assisting you today

Megan C :

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