Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

This answer was rated:

My elderly mother is recently widowed. She is selling her…

My elderly mother is...

My elderly mother is recently widowed. She is selling her house. The title is under an LLC. She is the only administrator. Will she be tax exempt from the sale of her house?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

What would you like to know?

Accountant's Assistant: Is there anything else important you think the Accountant should know?

The escrow co. with make out a check to the LLC. Will the irs want her to pay tax based on the 1099?

Show More
Show Less
Ask Your Own Tax Question
Answered in 3 minutes by:
3/22/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,137
Experience: Taxes, Immigration, Labor Relations
Verified

The question is - if LLC is a single member LLC ? - and if she is the member?

If yes - all income and expenses realized by the LLC are reported on her tax return.

If however - the LLC is a separate taxing entity - the situation is different.

You wrote - She is the only administrator.

But we need to know who owns that LLC?

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,137
Experience: Taxes, Immigration, Labor Relations
Verified
Lev and 87 other Tax Specialists are ready to help you
Ask your own question now
Customer reply replied 4 months ago
She and dad were the members. She was the administrator. Dad died.
The LLC was only formed to show title for the house. It had no other function. It is no longer functioning, except to close title on moms house. Escrow wants EIN for 1099.
The LLC was put under family trust 5 years ago.
Phone call session started

Let me summarize our conversation and proposed treatment for tax purposes based on your information.
.
So the property was titled in the LLC for legal protection only.
The LLC never realized any income and never filed income tax return.
The LLC was transferred to the trust - and the trust was a single owner of the LLC.
As such the single member LLC (SMLLC) is classified as disregarded entity for tax purposes.
The trust was credited as revocable living A-B trust where both spouses are grantors.
Such grantor trust is ignored for income tax purposes - and all assets are treated as owned by the trust.
.
An A-B trust is divided into two trusts upon the death of the first spouse.
In general a half of the assets belonged to the deceased spouse is considered as inherited - and as such getting stepped up basis.
That is based on section 1014
https://www.law.cornell.edu/uscode/text/26/1014
However because Arizona is a community property state - the FULL value of the property is getting stepped up basis.
.
So far - because ()LLC was a SMLLC and ()that was grantor trust --> the property titled to the LLC for estate tax purposes is included into decedent's estate
and because () that is a community property state
--> we are getting full stepped up basis equals to the fair market value at the time the decedent passed away.

So far - when the trust divided into two trusts upon the death of the first spouse -
the property will jointly owned by
-- trust B or the decedent's trust - assumable 1/2 of the property
-- trust A or the survivor's trust.
Regardless - we still have stepped up basis - and
when the trust reports the sale - it will use that basis and tehgain will be eliminated.
.
The issue will be with reporting because
- when EIN was assigned to the LLC it was not a SMLLC - and EIN was assigned as to the partnership.
In general when the LLC was transferred to the trust - we shoudl apply for a new EIN associated with the trust's EIN.
So when the sale transaction will be reported by the title company on form 1099S using LLC's EIN
- but the sale transaction will be reported on the trust's tax return under different EIN
- we will need to attach a note and explain circumstances and reasoning
- I also suggest to attach a copy of form 1099S

I think that basically all issues we discussed ans the strategy outlined during our conversation.
There might be some additional details come up when you will work on implementation.
If you will be using a local CPA - feel free to provide all that information for consideration.

Ask Your Own Tax Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,137
33,137 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev 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

4,512 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

15,569 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
I have a situation where a mother bought a house with her
I have a situation where a mother bought a house with her daughter and gave her $11K of down payment. I think the intention was for the mother to live in the house but due to unforeseen personal situa… read more
Lev
Lev
Tax Advisor
Bachelor's Degree Equivalent
33,137 satisfied customers
My husband is the executor of his mother, My husband is the
My husband is the executor of his mother's estate and is selling her house. The realtor said since he isn't working with a lawyer that the title company will have to escrow taxes based on the sale price of the home. That did not happen when I was the executor for my brother's estate. The house is basically her only asset, is this true? Does my husband have to pay the taxes out of his pocket and then request reimbursment? What about costs of getting the property ready for sale, shouldn't they be deducted if it is true that the title company can escrow taxes? … read more
Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,484 satisfied customers
My mother passed away Oct 2016, leaving her home to us 3
My mother passed away Oct 2016, leaving her home to us 3 children. That's all she had basically, she was elderly on SS, no retirement etc. No money in the bank. Just personal stuff except the house. S… read more
Lev
Lev
Tax Advisor
Bachelor's Degree Equivalent
33,137 satisfied customers
My elderly mother passed away and my brother and I are in
Hello, my elderly mother passed away and my brother and I are in escrow to sell her home through probate. We won't have a problem obtaining probate approval, but my brother and I are on title to the h… read more
Richard
Richard
Tax Attorney
Doctoral Degree
4,512 satisfied customers
I am the trustee mom's trust. She passed away in 2015.
I am the trustee for my mom's trust. She passed away in 2015. Her home sold 6 months later (also in 2015) for $197000. The Title company said her home sale fit the criteria for NOT filing an 1099S for… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
My sister owns a house that our mom lived in years
My sister owns a house that our mom lived in for many years until she passed away recently. My sister now plans to sell the house and give me a portion of the proceeds. My sister says that I will even… read more
Lev
Lev
Tax Advisor
Bachelor's Degree Equivalent
33,137 satisfied customers
My mother and I owned an investment property years. She
My mother and I owned an investment property for 9 years. She claimed the income and depreciation. We sold the property, minimal loss, she claimed 100% of purchase, sales price, accumulated depreciati… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Before my Dad past last November he stated he wanted his 3
Before my Dad past last November he stated he wanted his 3 kids to sell his home in Colorado and split the funds. My Mother is still with us and lives in my rent home here in Texas. We just sold the h… read more
Lev
Lev
Tax Advisor
Bachelor's Degree Equivalent
33,137 satisfied customers
Senario: 4 children, one widow. Family home in was in irrevocable trust to children in the
Senario: 4 children, one widow. Family home in was in irrevocable trust to children in the US Virgin Islands. The home sold recently and the realtor sent 5 checks equally divided. Realtor asked for so… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
My mother purchase a small house after my father died and put
My mother purchase a small house after my father died and put her children's names on the deed to make it easier to sell should she die. The title did not say "Pay on Death", it just had our names. Sh… read more
Lev
Lev
Tax Advisor
Bachelor's Degree Equivalent
33,137 satisfied customers
NYC Real Estate Property Law Questions: Elderly senior
NYC Real Estate Property Law Questions: Elderly senior citizen family member owns a 3-story connected town home in NYC. I want to transfer the property to my name with a) paying as little taxes as pos… read more
Lev
Lev
Tax Advisor
Bachelor's Degree Equivalent
33,137 satisfied customers
I recently purchased a house for my mother to live in for ...
I recently purchased a house for my mother to live in for 60,000 in Arkansas (title and mortgage is in my name only). My mother and I want to sell her old house/property for around 22,000-25,000. Howe… read more
Merlo
Merlo
Tax Consultant
558 satisfied customers
I purchased a house in 1994 for $54000 my mother and father ...
I purchased a house in 1994 for $54000 my mother and father went on the loan to help me qualify.I made all the payments to the mortgage company payed all the taxes and ins,and had it homesteaded in Te… read more
Lev
Lev
Tax Advisor
Bachelor's Degree Equivalent
33,137 satisfied customers
my mom could not afford to pay for her house any ...
my mom could not afford to pay for her house any longer since she lost her job. So my husband and i sold our house and moved in with my mom and redid the loan in our names to get a better rate etc. Th… read more
Guru_Guy
Guru_Guy
Doctoral Degree
1,634 satisfied customers
My husband and I received money from the sale of his ...
My husband and I received money from the sale of his mother''s home. There were 5 names listed on the title of the home, each person receiving 1/5 of the sale. So we received 2 checks, one in his name… read more
The Geezer
The Geezer
Master's Degree
120 satisfied customers
Do I have a tax liability if I quit claim my co-ownership
In order to assist my widow mother in law to pull equity out of her home for living expenses, I became a co-borrower, co-owner of her home 3 years ago with my wife, her step daughter. Mom has made all… read more
Dorothy M Jennell
Dorothy M Jennell
Enrolled Agent, Tax Preparer, Bookkeeper
Some College
16 satisfied customers
several years ago my motherinlaw signed over her house to
Several years ago, my mother-in-law signed over her house to my husband. It is in his name only. She recently passed away, and we will be selling the house within a few months. What tax will be owed? … read more
Christopher Phelps
Christopher Phelps
Sole Practitioner
Master Degree
1,180 satisfied customers
tax treatment of residence if converted to rental property
My sister and I were added to the deed on my elderly mother's house last year. Can we avoid capital gains on this property that my mother has lived in for over 50 years?? Is it possible to rent the pr… read more
Christopher Phelps
Christopher Phelps
Sole Practitioner
Master Degree
1,180 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