Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

5 heirs inherited real estate equally. Due to the wrong will

being filed with probate the...
5 heirs inherited real estate equally. Due to the wrong will being filed with probate the subsequent title will show 4 owners and an upcoming sale of the property will produce only 4 1099's. The 4 receiving heirs are willing to give the 5th heir her proper share. Will capital gains by nominee resolve the lack of a 1099 for the 5th heir problem?
Show More
Show Less
Ask Your Own Tax Question
Answered in 6 minutes by:
10/1/2011
Jax Tax
Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1,408
Experience: JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
Verified

Jax Tax : This is real simple as the actual deed means nothing. Each of the 5 persons will report of sch D their share of the basis and sale price. This will create a mismatch between the 1099s and the sales price listed on the 1040 of each, but a small annotation explaining will suffice.
Customer:

I don't totally understand. How will the annotation tie the income reported on the 4 1099

Jax Tax : I have a better idea.
Customer:

I'm listening

Jax Tax : Each of the four persons can simply file 1/4 of the transaction then each of the 4 listed owners can gift 1/4 of the 5th persons net share. So long as the payment from each of the 4 listed owners does not exceed $13k each, the gift is not reported or taxed.
Jax Tax : As for the initial question, you would simply list less than hat is reported on the 1099 on the sch D. The explanation will explain why less is reported. This would be fine. Otherwise, ask the closing firm to report to all five.
Customer:

the closing firm will be required to distribute the money per the title

Jax Tax : All and all, this can be dealt with easily. If there is a 5th owner, simply report on sch D only 1/5 with a written explanation on the 4 listed owner's returns why the proceeds listed are less than the 1099 or report it 1/4 each and gift the.funds to the 5th party.
Jax Tax : The distribution of the money is of no consequence. You can deal with it privately and report it as such.
Customer:

the amount will be greater than 65K from each of the 4 receiving heirs

Customer:

I thought that possibly that by declaring capital gains by nominee would generate the necessary 1099s for the 5th heir

Jax Tax : OK. Why then was the property inherited by 5 people but only titled to 4?
Customer:

The correct will dictated such

Customer:

the state of Ma., because of the wrong will that was filed, only title the 4

Jax Tax : So the best way is to report the sale 1/4 to each titled owner. Then the gift exceeding $13k will be reported on form 709 from each of the 4 owners. There is still no tax, bit the 5 million lifetime exclusion is reduced by the amount that each.of the 4 gift to the 5th over $13k. Just one extra form on the 1040. No tax to anyone.
Jax Tax : Any preparer can handle it.
Customer:

I just lost your last entry

Jax Tax : It is saved in the chat. This is the best way given the circumstances. You can still opt to report 1/5 on each return with a written explanation as to why the entire 1099 is not reported and the information of the 5th person reporting. Ill change the format to make it easier to see.
Ask Your Own Tax Question
Better?
Ask Your Own Tax Question
Customer reply replied 6 years ago
In my original question, I asked if the IRS process of assigning capital gains by nominee could be used. This appears to me as the easiest way to create 1099's for the 5th heir, but I'm not sure that it is applicable to a inherited real estate sale.
That is a process the IRS uses not one you will use, but is exactly what I am advising when I state that you could report it 1/5 each with a written explanation.
Jax Tax
Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1,408
Experience: JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
Verified
Jax Tax and 87 other Tax Specialists are ready to help you
Ask your own question now
The IRS using a nominee status is typically when a property is transferred to a person with a lower tax bracket alley to avoid tax. Not what you are doing. If that is what you are doing, IRS would use nominee rules to charge the party trying to avoid tax, the tax that would have otherwise been due.
Jax Tax
Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1,408
Experience: JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
Verified
Jax Tax and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Jax Tax Your Own Question
Jax Tax
Jax Tax
Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1,408
1,408 Satisfied Customers
Experience: JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions

Jax Tax is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
Form 8300. We are doing a business to business transaction.
We are doing a business to business transaction. The form is not clear on how to compete. Do we complete Part I f … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Can I report rental income in my tax return on a property
Can I report rental income in my tax return on a property thar is owned by my father? He does not live in the US is not a US citizen and can sign a document to allow me to receive the rental… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Is the sale of customer list a capital gain or ordinary income?
Is the sale of self-created intangibles, such customer lists, digital files, web sites, etc subject to capital gain or ordinary income treatment?… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Are you familiar with Capital Gain taxes on rental property?
Are you familiar with Capital Gain taxes on rental property? … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
What are tax rules for an inherited Roth IRA, GA, the
what are tax rules for an inherited Roth IRA JA: Since estate law varies from place to place, can you tell me what state this is in? Customer: GA JA: What documents or supporting evidence do you have?… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I sold a rental property at a loss (no capital gains);
I sold a rental property at a loss (no capital gains); however should I pay the $133,000 on the principal of my house I owe 166,000 at 2.8% or buy another rental? … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
We have $400,000 in capital gains for the sale of our
We have $400,000 in capital gains for the sale of our California home of … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Is a tax return less likely to be audited if it's prepared
Is a tax return less likely to be audited if it's prepared by a CPA or simply a tax person? Secondly, our Rotary Club is a 401 C for we have a 401 c 3 Foundation the question is can individual members… read more
socrateaser
socrateaser
1,031 satisfied customers
What is the capital gains tax on proceeds of the sale of a
What is the capital gains tax on proceeds of the sale of a home? … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,220 satisfied customers
How to report the sale of a property outside US? How to
How to report the sale of a property outside US? How to claim the taxes paid abroad on the profit made by selling property overseas?… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Do Florida residents have to pay State capital gains taxes
Do Florida residents have to pay State capital gains taxes on the sale of FL business &/or personal assets?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,483 satisfied customers
A Form 1065 partnership return is being prepared for a
A Form 1065 partnership return is being prepared for a partnership whose General Partner is a single member LLC. In the Analysis of Net Income (Loss) section at the top of page 5, is the LLC's portion… read more
taxmanrog
taxmanrog
Master\u0027s Degree
699 satisfied customers
Do you have to pay BIRT tax on capital gains from sale of
Do you have to pay BIRT tax on capital gains from sale of rental real estate … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Does an IRS agent qualified to prepare capital gain taxes, I
Does an IRS agent qualified to prepare capital gain taxes … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
736 satisfied customers
Sudden large stock sale with large capital gains. For
Sudden large stock sale with large capital gains. For federal and NY state income tax purposes, if I pay 110% of the taxes I paid in 2016, will I avoid any penalty when final tax bill is due April 15,… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,220 satisfied customers
Rules on Rollovers (Return of a non-taxed IRA Distribution).
Rules on Rollovers (Return of a non-taxed IRA Distribution). Over 70-1/2 years old) … read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
IRS said the Roth IRA reported distribution was not held for
IRS said the Roth IRA reported distribution was not held for at least 5 years. It was. I was told I needed to send in a 8606 with my 2014 tax return. How do I go about doing that so I don't own the $1… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
It is regarding capital gains tax on sale of investment
it is regarding capital gains tax on sale of investment property … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x