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Your wife, her two sisters and their father's companion will report their 1/4 share as to basis and sale proceeds.
For example, if they each received a 1099-S for $25,000 that would be the sale proceeds less 1/4 of any real estate commissions or closing costs.
The basis would be the 1/4 value as of the date of your wife's father's death because inherited property receives a "stepped up" basis.
Capital gains, if any, is paid on the difference between the basis and selling price. Usually, when property is sold fairly quickly after inheriting, there is no capital gains.
You report the sale of inherited property on Schedule D of Form 1040. You must also provide information about the property on Form 8949, which requires the address of the property, the date you inherited the house, the date of the sale, the sales price and the adjusted or original basis, as applicable.
The IRS considers the sale of inherited real estate long-term capital gains, regardless of how long you owned the property, so you must enter information about the sale in Part II of Schedule D, which starts on Line 8. Use the information you provided on Form 8949 to complete Lines 8 through 21 and enter the resulting figure on Line 13 of Form 1040.
I would be happy to assist you by walking you through the forms, if necessary.
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