Cost of selling inherited house

[Kea]

My client & her siblings inherited their parents' house. 1/2 from Dad 20 years ago & 1/2 from Mom in 2008. They sold it in 2010.

When determining their basis, I know I can include the costs of sale. Can that include the legal fees they paid to get Affidavits of Heirship paid in 2009? (The parents' had wills but neither were ever filed.) I'm thinking that is more of an estate type cost, but I'm not sure.

Also, if any of the siblings had to travel to Austin to clean out the house to prepare for sale, can any of those costs be included? (Again, I think not, but just trying to add whatever I can legally.)

I have FMV from both years and closing document from 2010 sale.

Thanks.

[Kea]

Bump.

[mcb39]

I have a client who inherited a house and farm along with eight siblings in 2005. Two of the brothers wanted to keep the place but didn't have the money to buy out the others all at once. My client finally got her payout this year along with a 1099S. I suspect they took my client to the cleaners (sort of). I am going to add her attorney fees to her basis for a capital loss. I am also having her do a document search to find out if she actually received the amount indicated on the 1099 as they paid her off over the course of two or three years. If she actually received less, I will adjust her loss accordingly. This was supposed to have been an equal 9 way split. IMO, the brothers who wanted to keep the property should have mortgaged it immediately and paid off the daughters. In the meantime, another brother who has 1/9 share dies and leaves his share to (guess who) the other two brothers. I told my client that she needs to take emotion out of the equation and just deal with the facts. If they messed with her, she has every right to claim her loss and let them deal with the results if there are any.

In your case, I would allow the siblings who did the traveling to do the cleanup and cleanout to take those expenses against their original basis on their individual tax returns. Inherited property equals LT and costs are deductible. The new 2010 rules don't affect your client since the inheritance actually took place in prior year.

[Kea]

Thanks Marilyn. I hope your client got her fair share.

I knew my client didn't have to deal with the 2010 rule changes (and I'm not looking forward to dealing with that). And I knew everything was a nice, easy 5-way split. I was just trying to determine how aggressive I could be in determining what counted towards selling costs that could be add to basis.

Thanks so much & good luck to your client.