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My siblings and I sold some inherited property this year and…

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My siblings and I...

My siblings and I sold some inherited property this year and are not sure how to report it. It was in deplorable condition in 2011 when Dad passed and after several years of hauling away trash and clearing brush we sold it "as is" for $280,000 and split the proceeds 4 ways. We do not have a starting value. There was a house with renters, but they basically kept the yard mowed and covered property taxes so it was not an income property. How do we report this?

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

I put 1/2 of mine into a 10-year annuity if that helps.

Submitted: 1 month ago.Category: Tax
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3/23/2018
Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 1 month ago
Chad EA, CFP ®
Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 2,172
Experience: Federally licensed IRS Enrolled Agent, Certified Financial Planner (R), MBA
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My name is***** will assist you today.

Please give me one moment while I review your question and type my initial response

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 1 month ago

Property that is inherited receives a step in cost basis to the fair market value at the date of death of the property owner.

Therefore, your starting point for determining your profit or loss is the value of the property at the date of death of your father plus any improvements you have made over the years.

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 1 month ago

Once you determine your starting point (cost basis) you will then subtract that amount from the total net sales proceeds to determine your overall gain or loss.

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 1 month ago

Given your description of the property, you would report the sale of the property as an investment property. You may not have received payment, but you did receive services from the renters.

___

Report the gain or loss on the sale of rental property on Form 4797, Sales of Business Property. Individuals typically use Schedule D (Form 1040), Capital Gains and Losses, together with Form 4797.

Please let me know if this has answered your question or if you have any additional questions.

When you have no further questions a positive rating of 5 stars is much appreciated.

Thank you!

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 1 month ago

Please let me know if this has answered your question or if you have any additional questions.

When you have no further questions a positive rating of 5 stars is much appreciated.

Thank you!

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