Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

My sister and I inherited a contract which paid a monthly…

Customer Question
My sister and I...

My sister and I inherited a contract for deed which paid a monthly payment to my mother on a 30 year note. we now each receive half each month. My CPA has been figuring tax for me on the principal paid to me. My sister's CPA tells her that she owes tax only non the interest she receives. Which CPA is correct? The inheritance was on a piece of property.

Accountant's Assistant: Thanks. Can you give me any more details about your issue?

The tax on the principal payments. In approachinh each CPA they say differentlyMy CPA files has filed it on form 6252 and on a quotient of.2835.times the principal. My sister's CPA says no to tax on principal. Who is right?

Submitted: 2 years ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 20 minutes by:
2/3/2016
Tax Professional: Robin D., Senior Tax Advisor 4 replied 2 years ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 17,828
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified

Hello

Also known as land contracts, contracts for deed are installment sales pertaining to homes. A homeowner selling a home in a contract for deed retains ownership until the installment sale contract is fulfilled.

Whoever receives the installment obligation as a result of the seller's death is taxed on the installment payments the same as the seller would have been had the seller lived to receive the payments.
For an installment obligation, payments include:

(1) a return of a portion of the asset's cost (basis) which is not taxable,

(2) a portion from the prior sale of the asset which is taxable as a capital gain, and

(3) taxable interest on the note.

I agree with your CPA.

Your sister's CPA will have to deal with the IRS if they audit your sister.

You are required to click a positive rating so I am credited with the response.

Ask Your Own Tax Question
Tax Professional: Robin D., Senior Tax Advisor 4 replied 2 years ago

After you view my response, please post below if you need more information or if you need no further clarification a positive rating is appreciated.
I know rating takes an additional step and I truly appreciate it when you take the extra time!

Ask Your Own Tax Question
Was this answer helpful?
Ask Robin D. Your Own Question
Robin D.
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 17,828
17,828 Satisfied Customers
Experience: 15years with H & R Block. Divisional leader, Instructor

Robin D. 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

1,338 satisfied customers

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

Richard

Richard

Tax Attorney

4,495 satisfied customers

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

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

17,828 satisfied customers

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

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 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.

< Previous | Next >

Related Tax Questions
A HOUSE WAS INHERITED AND USED AS RENTAL PROPERTY FOR 2
A HOUSE WAS INHERITED AND USED AS RENTAL PROPERTY FOR 2 YEARS THEN THE NEXT 2 YEARS IT WAS HELD FOR INVESTMENT AND IMPROVEMENTS MADE TO BE SOLD. HOW TO REPORT THE SALE (IT WAS A GAIN) AND RECAPTURE TH… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,205 satisfied customers
Are installment sales of rental real estate sales allowed in
Are installment sales of rental real estate sales allowed in PA or does the entire gain have to be reported on the pA-40 return in the year of sale, regardless of whether the payments are being made i… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,205 satisfied customers
I inherited rental properties in 2014. In closing out the
I inherited rental properties in 2014. In closing out the estate, I had to have an appraisal done to value the inheritance. I have done a number of capital improvements to the properties over the past… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,205 satisfied customers
What is my capital gains tax liability on commercial
what is my capital gains tax liability on commercial property inherited in 1991. assessed value at the time of inheritance was $171,000. Selling price would be $850,000; $200,000 at time of sale - bal… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,205 satisfied customers
What is the percentage of tax is charged on inheritance
what is the percentage of tax is charged on inheritance money … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,205 satisfied customers
I am working on the Form 6252, Installment sale Income. My
I am working on the Form 6252 , Installment sale Income. My client Sold in 2016 her business and on the 2016 she received her first payment and the final payment is 2017 for whom i am doing the tax re… read more
Dr Arthur Rubin
Dr Arthur Rubin
Doctoral Degree
24 satisfied customers
On property inherited in July 2015, if sold, how much tax
On property inherited in July 2015, if sold, how much tax will be owed. … read more
Robin D.
Robin D.
Senior Tax Advisor 4
17,828 satisfied customers
Interested in flipping homes. Have a chunk of inheritance I
Interested in flipping homes. Have a chunk of inheritance I have all the skills. Any drawbacks ? Timeline to flip ? Do I need to hold on to it a period of time ? North shore. Illinois.… read more
Cole Parker
Cole Parker
Principal/CPA
Bachelor\u0027s Degree
102 satisfied customers
I need some help for a client with installment sale of some
I need some help for a client with installment sale of some land that was recently foreclosed on and taken back by the seller. … read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
A spouse inherited an interest in a real estate LLC from her
A spouse inherited an interest in a real estate LLC from her deceased husband. There was a big increase in the value of the real estate from when her husband contributed it to the LLC. Normally you wo… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Inherited land/property - term loss or? Several moving
Inherited land/property - long term loss or? Several moving parts: Taxpayer inherited, along with her elderly father, a 40-acre plot with structures not used for rental activities and a 2.5 acre plot … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
If a property is inherited and the inheritor has and still
If a property is inherited and the inheritor has and still intends to live in said property, does the capital gains tax still apply? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,117 satisfied customers
Do You Need to Pay Capital Gains Tax on Inherited commercial
Do You Need to Pay Capital Gains Tax on Inherited commercial Arizona Property If Sold? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,117 satisfied customers
Installment Sale vs Mortgage Taxpayer owns a piece of real
Installment Sale vs Mortgage Taxpayer owns a piece of real estate and plans to sell to a non-related individual. Taxpayer will hold the note on the sale. Does that automatically make it an installment… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,205 satisfied customers
Installment Sales / Rent to own A taxpayer has several
Installment Sales / Rent to own A taxpayer has several rental properties. 1. A couple properties are listed on their tax return as an installment sale and are being handled properly, recording interes… read more
abci168
abci168
Principal
27 satisfied customers
I sold the business assets in an installment sale. Proceeds
I sold the business assets in an installment sale. Proceeds were: … read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I have a question on Form 6252 Installment sale on Property.
Hi I have a question on Form 6252 Installment sale on Property … read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,117 satisfied customers
Short Term Installment Sale. Client purchased a property,
Short Term Installment Sale. Client purchased a property, then sold for a gain in less than 1 year. The sale is an installment sale. My software is picking up the entire gain as ordinary income this y… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,296 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