As the property was inherited - we need to determine the basis as the fair market value at the time the decedent past away.
You might have some improvement expenses over the time after it was inherited - so add these to the basis - and that will be your adjusted basis.
The gain is calculated as 145,000(sale price ) MINUS (adjusted basis ) MINUS (selling expenses - Realtor fees, inspections, etc)
That gain will be taxable. Whoever is listed on the title as co-owner will need to report his/her share of the sale transaction - and will realize a share of the gain.
Depending on individual circumstances - that gain might be taxable or not based on the total income, filing status, deductions, etc.
I am not sure why the check is issued only to some co-owners - but that generally doesn't change the tax treatment - each co-owner will need to report his/her share.
There is no federal estate tax on small estates - and there is no federal inheritance tax.
The Colorado estate tax does not apply to decedents whose date of death is on or after Jan. 1, 2005.
So - if there were any estate tax liability - that must be handled at the time the decedent passed away.
For income tax purposes - inheritance is not a taxable income.
There is no any amount limit. It does not matter how the gift is transferred - as long as that is a gift - there is NO tax liability.
Please see for reference IRS publication 525 -
Gifts and inheritances. In most cases, property you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you.
Every person may gift assets that he/she owns. So if you receive an inheritance and AFTER that decided to gift to any other person - you may do that.
As a donor - you might be responsible for gift taxes - that is different from income tax.
A gift up to $14000 per person per year is NOT taxable and is not reported.
If you gift is more than $14000 to any single person - you would be required to file a gift tax return - from 709.
However - there would not be any gift tax liability as long as you do not reach the lifetime limit of $5,430,000 (for 2015)
There is no "best" way to report. the sale transaction is reported on form 8949 - and the gain is calculated there and transferred to schedule D .
If you realize either a gain or loss - that amount is transferred to form 1040 line 13 and added to your other taxable income.
Any questions? I am here to help you.