sale of dec'd mothers home

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sale of dec'd mothers home

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chap729

Posted 2/5/2008 8:30:22 AM

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Group: Forum Members
Last Login: 2/5/2008 8:24:22 AM
Posts: 1, Visits: 1

widowed mother passed away Jan 07. Sold her home (which was in a trust) in Auguest. home sold for FMV at time of death. Is there a reporting requirement on 1041 and 1040's

Post #534

Anonymous

Posted 2/6/2008 9:55:18 AM

You should file Form 1041. The form is required when income exceeds $100. If no 706 is required, you probably have a capital loss on the sale. The FMV at date of death is often the selling price when the sale occurs so soon after the death. The selling expenses would be a capital loss that you can distribute to the heirs.

Often when I have a "first and final" From 1041 I enter "none" in the box for the EIN. The IRS will issue one later after the return is processed but there would be no need for it. Otherwise you could go through the procedure for obtaining an EIN. It's more difficult to do that online than previously.

I don't see that there would be a 1040 filing requirement if she passed away in January - she's unlikely to have enough income to meet the filing requirement. Income collected after the date of death would be reported on the Form 1041.

Mary Kay Foss
I guess I forgot to log in

Post #535

Anonymous

Posted 2/18/2008 2:24:30 PM

Thanks for the info.
I assume I will enter the sale of the home on the 1041 Sch D (long term) with the selling price and adjusted basis being the same since we sold it for the fmv. Am I correct? If so then there would be no tax consequence for the children. I do have some interest and an annuity to enter on the 1041 which will flow thru to the K1's but I was not sure how to enter the sale of the home.
Will 1041 Sch D Part 2 be as follows:
Col A description - home.. Col B date acquired will be the DOD.. Col C date sold 08/08/2007..Col D sales price will come from contract (same as appraisal)..Col E will be FMV and Col F should be zero.
Does this sound right?

Post #547

Mary Kay Foss

Posted 2/26/2008 9:22:15 AM

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Last Login: 2/16/2010 6:30:43 PM
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I think that you will report a loss on the transaction. The sale will be reported as long term (because all inherited property is long term) - the sales price will be as you indicated. The cost will be the appraised value/sales price PLUS the selling expenses.

Up to 3k of the loss will go on page 1 of the Form 1041 to offset some of the other income. If this is the final return, the remaining loss will get carried out on the bottom of the K-1. Mark your input to show that all of the capital gains/losses are distributed as well as the income. Fill out the "other amounts distributed" section with percentages and it should all work out.

I had trouble accessing the forum for the last few days.

Mary Kay Foss

Post #551

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