House Sale to Son

[Lee B]

Clients H & W purchased a small house back in 2007 for $107,000, which they never lived in.

Client made mortgage payments and paid property taxes while their son and his wife lived there.

In July 24 they sold the house to their son and his wife and received a 1099 S for $200,000.

$95,000 of the $200,000 was a gift from the H & W to their son and his wife, so their was no gain.

What the best way to report this sale which shows the gross proceeds of $200,000 on the 1099 S?

 

[jklcpa]

You might want to read this topic below that covers a similar pattern. Was an appraisal done to determine the actual FMV of the house, or do you possibly have a sale to a related party for below market value?  There are other threads on this topic also. Just search this site for "gift of equity" in quotes and you should easily find more that describes the reporting.

 

[DANRVAN]

2 hours ago, Lee B said:

the gross proceeds of $200,000 on the 1099 S?

The gift is a reduction of the fmv sale price.   Show it as an adjustment on column f of 8949 and use code O.