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Old 11-17-2015, 08:50 PM
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Estate Tax Question

Good evening, hopefully this doesnt come across as a stupid question as I have never had to deal with this.

My siblings and I are trying to determine what, if any, tax we will have to pay when we or my deceased mothers estate taxes are due.

Facts:

-Mother passed away in Feb 2015 and left the home to myself and my two siblings.
-We covered the costs of her arrangements and bills and whatnot over the next several months while the house was up for sale.
-Home sold in July, purchased by certified check written out to the “estate of xxxxxxx (mothers name)”, not to me and my siblings by name. Home sold for less than market value so there should be no capital gains.
-Check for sale of home deposited into estate account to help fund everything during probate.

Probate is now officially closed and all debts are paid and we are ready to split what remains amongst the three of us.

We are questioning what the taxes could be on this money so we essentially know what to keep aside come tax time.

As far as I have read, the home sale is not taxable because there were no capital gains. The thing I am worried about is that since my brother (executor) had the buyer write check to the “estate of”, does that count as income to the estate meaning its now taxable even though the money came from the home inheritance which should not be taxable?

Any help would be appreciated…



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Old 11-19-2015, 06:21 AM
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My siblings and I are trying to determine what, if any, tax we will have to pay when we or my deceased mothers estate taxes are due.

Facts:

-Mother passed away in Feb 2015 and left the home to myself and my two siblings.
-We covered the costs of her arrangements and bills and whatnot over the next several months while the house was up for sale.
-Home sold in July, purchased by certified check written out to the “estate of xxxxxxx (mothers name)”, not to me and my siblings by name. Home sold for less than market value so there should be no capital gains.
-Check for sale of home deposited into estate account to help fund everything during probate.

Probate is now officially closed and all debts are paid and we are ready to split what remains amongst the three of us.

We are questioning what the taxes could be on this money so we essentially know what to keep aside come tax time.

As far as I have read, the home sale is not taxable because there were no capital gains.====>Correct. If you have capital loss (from the disposition of the home held for investment ) from selling the inherited home, You can deduct up to $3K in leftover loss from your other income, or $1.5K if you're married filing separately. Everything else carries forward. If , however, the house is not held for business or investment use I mean if you make the house your personal home before selling, be warned: capital losses on your personal residence aren't deductible.You need to use Form 8949 to figure your capital loss, then report the result with any other capital gains or losses on Sch D o f1040. You need to report the carried loss next year on Sch D of 1040 and factor it in with next year's gains and losses. You're still stuck with the same $3K limit next year.

The thing I am worried about is that since my brother (executor) had the buyer write check to the “estate of”, does that count as income to the estate meaning its now taxable even though the money came from the home inheritance which should not be taxable? ==========>>no;basically, your brother, the executor, must file a federal income tax return of Form 1041 due on Apr. 15 aslongas the estate has gross income for the tax year of $600 or more regardless of taxable income; estates meeting this condition must file a return regardless of its net value. Also, what ever is the total loss realized is indeed divided amongst the beneficiaries and allocated proportionately.I mean
UNLESS the estate is yet closed, the capital loss remains with the estate and cannot be passed to the beneficiaries while the estate is still open. In the year the estate is terminated the capital loss passes to the beneficiaries on your SCh K-1s of 1041.



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Old 11-19-2015, 06:51 AM
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Join Date: Nov 2015
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Thank you so much for the detailed reply.

My brother came by last night and we went through the 1041 form. Every single line had a zero with the exception of the (10000) loss for the sale of the home.

One question we had was does the sale of the home count as taxable "income"? We did not believe so when using the guidelines on the 1041 instruction form.

We did not use the home for personal use at any point after my mother passed, before sold.

Thanks again



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