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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10114
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Father-in-law sold his house. House was 30% in his name and

Customer Question

father-in-law sold his house. House was 30% in his name and 70% in childrens' (5) name. The 5 children are due to receive $19,000 each. Children did not live in house. Is the $19,000 reported as a long term capital gain?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.
Hi,If the house was sold FOR a gain then they WILL have to report their proportionate share
Expert:  Lane replied 1 year ago.
Les say that (to make the math easy) the house was urchased for 100000 and sold for 200,000 there would be a 100,000 gain
Expert:  Lane replied 1 year ago.
So each child owned 70 / 5 = 14%This means that they each have a .14 x 100000 = $14,000 gainto report (given that assumtion)
Expert:  Lane replied 1 year ago.
Capital gain = sales price minus basisand basis is purchase price (or the puchase price of the giver, if this was gifted to them) plus any improvements
Expert:  Lane replied 1 year ago.
Make sense?
Expert:  Lane replied 1 year ago.
Ok, I still don't see you coming into the chat here ... but yes, the children will have a reportable gain if the house was sold for more than it's basis (what the owners have in it, so to speak).If they help foor more than one year, this IS a long-term gain.Long term gains are taxed based on the household's total taxable income for the tx year (of which the capital gain IS a part)Long-term gains and qualified dividends taxed at0% if taxable income falls in the 10% or 15% marginal tax brackets15% if taxable income falls in the 25%, 28%, 33%, or 35% marginal tax brackets20% if taxable income falls in the 39.6% marginal tax bracket
Expert:  Lane replied 1 year ago.
… I’ll move us to “Question and Answer” mode … (We can still continue our discussion there, just not in real-time chat) … This way JustAnswer won’t charge you for for additional chat time and we can continue the dialogue.
Expert:  Lane replied 1 year ago.
If this HAS helped, I would appreciate a positive rating (using the stars or smiley faces on your screen)… That’s the ONLY WAY I'm credited for the work here.
Expert:  Lane replied 1 year ago.
I'll be waiting for you in Q&APlease let me kknow if you have aany questions at all.Lane
Expert:  Lane replied 1 year ago.
Hi,
I’ve moved us to the Q&A mode so JustAnswer won’t charge you for more Chat time.
Please let me know if you have ANY questions at all..
Lane
Expert:  Lane replied 1 year ago.
Hi,
I'm just checking back in to see how everything's going.
Did my answer help?
Let me know ...
Lane