sale of deceased parents' house

[Kea]

My client is the sole heir of his late parents' house. The deed never transferred to his name, which implies that the house was sold by the estate and goes on Form 1041. However, the 1099-S was issued in client's name and social. Does this mean I should report it on the client's return?

(Parents both passed away in 2007 and had not been required to file a tax return for the last several years. The only transactions after they passed away were payment of medical bills and sale of house.)

Thanks

[jasdlm]

Was the deed by any chance a transfer on death deed?

[TAXBILLY]

I would report it on the client's personal return. That way it will be matched and there probably isn't a gain anyway.

taxbilly

[Kea]

I don't know for sure, but I seriously doubt it. I don't think these parents would have known to do that. It was a simple estate with only a house and car.

[Kea]

I tend to lean towards putting it on the client's return, also. But there could be a gain (see my other post "basis of house"). An appraisal was done for significantly less than what the house sold for a short time later. That implies to me that it was a bad appraisal. Since the house sold within a year of date of death, I agree the gain should be small to non-existent. Especially in today's real estate market.

[TAXBILLY]

I agree with you on that.

taxbilly

[lbbwest]

I tend to lean towards putting it on the client's return, also. But there could be a gain (see my other post "basis of house"). An appraisal was done for significantly less than what the house sold for a short time later. That implies to me that it was a bad appraisal. Since the house sold within a year of date of death, I agree the gain should be small to non-existent. Especially in today's real estate market.

Once again, appraisals are "Guesstimates" of the Fair Market Value is. (Arms length willing buyer and willing seller.) Selling price IS fair market value if sold within previously posted criteria.

[RitaB]

My client is the sole heir of his late parents' house. The deed never transferred to his name, which implies that the house was sold by the estate and goes on Form 1041. However, the 1099-S was issued in client's name and social. Does this mean I should report it on the client's return?

I would report the transactions on the return they belong on, and, as I understand it, transactions (that don't belong to an heir) after the DOD are estate transactions. But, since the forms were done incorrectly, you should address them somehow on the personal return. You know, back out the figure with an explanation on the personal so IRS knows what happened.

On mine that the lawyer keeps saying, "You don't have to do anything. The estate handled everything..." that's what I'm gonna do. It really bugs me that the attorney charged a big fee to "handle" everything, and did not. The estate number is not on anything. In fact, I had to call him to get it. The clients have everything, and the number is not on any form.