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Inherited property was sold in California with my four

siblings. I live in GA...
Inherited property was sold in California with my four siblings. I live in GA. I received a 1099-S for my portion of the sale. I also had to pay Mandatory Real Estate Withholding to the CA Franchise Board. Will I need to file a non-resident CA income tax return to get a refund of this payment? It was required of me at closing and will submitted by the escrow company on my behalf.
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Answered in 29 minutes by:
3/13/2018
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,046
Experience: Former IRS Revenue Agent
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I'm Fiona, former IRS revenue agent. I am looking at your question and will get back to you soon. Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP,IMTA

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Dear Customer,

If you live in Georgia, you have to file GA resident tax return. When you file California non-resident tax return, it is hard to say whether you can get your tax refund or not. But that is the return which needs to be filed. It is because this is a California source income. However, please continue to read the following.

Please describe the inherited real estate property [?] you had. They are seldom sold with any profit and usually sold with lost usually because the heirs do not have enough financial resources to hold the property to be sold at a profit.

The inherited property in the heirs' hand is investment property and takes on the long-term characteristic with the fare market value at the date of passing or alternate date of 180 days later. With the sales commission, repair and maintenance, stage cost for sale, it can hardly be profitable on the tax return.

Of course, if it is a rental property and it has to recognize recapture of depreciation at the regular tax rate, it may be different.

Please feel free to follow up.

Regards,

Fiona

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Customer reply replied 3 months ago
I apologize for the delay in replying. The property was a building and land (used as a car lot). At the time of inheritance, the property had a FMV of 166,000 (1991), with building FMV of 30,000. Improvements of 15,000 were added in 1991. The building and improvements have been depreciated almost 26 years. The selling price in 2017 was 300,000.
Sales commission on the sale was 18,000 and various other charges for filing fees, etc. My portion was 1/8.

Dear Customer,

It is inherited real estate property. Therefore, the cost basis is, the date of death or 180 days after, which is probably close to 300,00 or higher, plus commission, 18,000. However, the depreciation of 26 years out of 39 years of building value of the depreciation needs to be recaptured to reduce the cost basis. This recapture has to be taxed as 1250 real estate property. But if the sale is lost, its effect may not show.

The sales price 300,000 probably is lower than the market price.

Wait until you receive the Form 1099-S. It is possible for all eight of you, each will get a full price 1099. Then, in your tax return, you need to report the full amount and adjust the basis to make sure that the net gain or loss is only on your 1/8.

Regards,

Fiona

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Customer reply replied 3 months ago
Thank you for your help. Much appreciated.

Dear Customer,

You are welcome. A five star rating for me to get credit for the work is appreciated.

Thank you.

Regards,

Fiona

Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,046
Experience: Former IRS Revenue Agent
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