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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10172
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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My mother left me executor of estate The settlement date on

Customer Question

My mother left me executor of estate The settlement date on the sale of her home is 9/30/2015 and 115,000. was deposited in bank. We now need to divide 115,000 five ways. How do I report this sale I would be willing to pay a fee for this info.ty
JA: The accountant will know how to help. When we are ready I'll take you to the appropriate web page.
Customer: Lets go
JA: Is there anything else important you think the accountant should know?
Customer: She had 1500. in others assets which has be distributed and 384. that was in saving acct.
Submitted: 22 days ago.
Category: Tax
Expert:  Lane replied 22 days ago.

Hi. My name's Lane. I can help you here.

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The sale of a home is reported by the person who owns the home ... If it was left by will to each of you, then you'll each report your proportional amount (1/5).

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THe WAY it's reported is as a capital gain or loss.

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However, it's very common not to HAVE any gain when a home is sold after someone's passing becsue of something called the "step-up" in basis.

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Capital gain = Sale price - basis

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And NORMALLY basis is what you have invested in the property (pruchase price plus any improvements).

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But when an asset is left at death, the heirs get this STEP-UP in basis to the Fair Market Value (as of the date of death of the person leaving it)

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So, it's very likely, that if you sold the house before market prices had time to rise (since the date of death) that there will be no gain at all

Customer: replied 22 days ago.
would I need to prepare 2 1041's for 2015 and then 2016 or is 1 return okay with final on the 2016 return
Expert:  Lane replied 22 days ago.

So lets say that the property was worth 115,000 at the date of death, and you sold for 115,000, there would be no gain at all (maybe even a loss because of the costs of selling)

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If it was only worth 90,000 on the date of death, that a gain of 115000 - 90000 = 25000

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That's a 5000 gain for each of you

Expert:  Lane replied 22 days ago.

If the estate sold the house (meaning it wasn't left through will, the yes you'll need a 1041, but only one) showing all income, and then use the 104's K-1 to pass out the income to the heirs, so that the tax is paid at th MUCH lower individual rates (as oposed to the VERY high estate income tax rates)

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but if there's NO GAIN and no other INCOME after the date of death, there's no need to do a 1041 at all

Expert:  Lane replied 22 days ago.

Sorry I'm seeing some sort of an error on my end, with th call request

Expert:  Lane replied 22 days ago.

You only prepare a 1041 if there is income ... so your question about two vs one ... only two if there was income in both years... and again, if there was no INCOME becasue there's no net gaoin on the sale and the other assets are just assets (not generating an income) you ay not heed the 1041 at all

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