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1099 for inheritance

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Lisa Confused

Junior Member
What is the name of your state? South Carolina and New York

Mother died 1 year ago and the closing on her house is next week. The inheritance was to be divided between 5, but 2 have decided to give their share to their mother.

Since some of us need to be reimbursed for expenses, we decided to have the money sent to my account in NY and I will disburse the monies after all bills are satified. This leaves possibly $1,000 each, although I am not exactly sure yet.

My question is, since the 2 are giving their share to their mother, will they still have to pay tax on their share of the sale of the house?

Actually, since I see so many conflicting answers on the web, will any of us have to pay?
 


Zigner

Senior Member, Non-Attorney
None of the recipients should have to pay any tax (depending on how you structure it).
 

LdiJ

Senior Member
What is the name of your state? South Carolina and New York

Mother died 1 year ago and the closing on her house is next week. The inheritance was to be divided between 5, but 2 have decided to give their share to their mother.

Since some of us need to be reimbursed for expenses, we decided to have the money sent to my account in NY and I will disburse the monies after all bills are satified. This leaves possibly $1,000 each, although I am not exactly sure yet.

My question is, since the 2 are giving their share to their mother, will they still have to pay tax on their share of the sale of the house?

Actually, since I see so many conflicting answers on the web, will any of us have to pay?
When mother died, those that were inheriting the house received a stepped up basis to the fair market value of the house, on the date that she died, or the alternate valuation date, which is 6 months later.

Since the housing market is down, there is little chance that the house appreciated in the last year, therefore none of you would have any capital gains, and therefore no capital gains tax.
 

anteater

Senior Member
While, strictly speaking, it is outside the tax question:

1) Why is there no mention of a probate estate or the estate's personal representative?
2) Why are the proceeds being sent to a personal account?
 

Lisa Confused

Junior Member
Zigner, What did you mean by depending how I structure it? I would imagine either anyway it is structured, the indiviuals who inherited would need to pay tax depending on their state?

Sorry for my ignorance. This is all new to me.
 

LdiJ

Senior Member
Zigner, What did you mean by depending how I structure it? I would imagine either anyway it is structured, the indiviuals who inherited would need to pay tax depending on their state?

Sorry for my ignorance. This is all new to me.
Again, on a federal level there would be no tax due unless there was a gain on the sale. It is very unlikely that you had a gain on the sale, since your basis is the fair market value as of the date of your mother's death, and the housing market has tanked in the last year.

On a state level there could be some inheritance tax, (every state is different) but the amounts of money involved are small enough that it probably isn't going to be an issue.
 

Lisa Confused

Junior Member
Okay LdiJ, thanks.

Seems a shame that a couple of decent young people will have to pay anything at all since they giving the very small amount of money that will be left after bills are paid, to their mother. No money will even go into their accounts.
 

Snipes5

Senior Member
Contact a tax professional in your area to help explain this to you. Keep in mind that although there will likely be no tax to be paid, information about the transaction must be included on the tax returns of the recipients.

What those two are giving their mother is called a gift, and if there is tax, it is normally paid by the person who gives the gift, not the recipient.

Snipes
 

Lisa Confused

Junior Member
Thank you all. I guess getting a professional to do this for us makes sense. I was just trying to keep costs down, because now most likely no one will receive a penny.
 

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