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  1. #1
    CLJM is offline Member
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    1099 inheritance tax question

    What is the name of your state? Washington

    Question, if you please.....My Mother who lives in the State of Washinton has received a 1099 from the closing attorney that sold a home in Pennsylvania that was a part of her inheritance from her parents estate in Pennsylvania; both having passed away respectively in 1982 and 1999. The estate (the 5 children) have been handling the affairs and properties since the parents passing and, decided to sell 1 of the properties----each receiving their share at closing, and now each receiving a 1099 for their share of the proceeds. My question on her behalf is this: ....as this is part of an inheritance, how should this 1099 be treated on her 2006 tax return ? I might add she is 79 and receives social security though she does subsitute teach a few days a month for her enjoyment. The 1099 was, I believe for about $10,000.00.
    Thank you kindly.
  2. #2
    LdiJ is offline Senior Member
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    Quote Originally Posted by CLJM
    What is the name of your state? Washington

    Question, if you please.....My Mother who lives in the State of Washinton has received a 1099 from the closing attorney that sold a home in Pennsylvania that was a part of her inheritance from her parents estate in Pennsylvania; both having passed away respectively in 1982 and 1999. The estate (the 5 children) have been handling the affairs and properties since the parents passing and, decided to sell 1 of the properties----each receiving their share at closing, and now each receiving a 1099 for their share of the proceeds. My question on her behalf is this: ....as this is part of an inheritance, how should this 1099 be treated on her 2006 tax return ? I might add she is 79 and receives social security though she does subsitute teach a few days a month for her enjoyment. The 1099 was, I believe for about $10,000.00.
    Thank you kindly.
    She has to pay tax on her share of the gain on the sale. The gain is her share of the sales price minus her share of the basis.

    The basis would have been the fair market value of the property at the date her last parent passed away....assuming that none of the property transferred to her until then. If part of the property transferred to her when her first parent died, then it gets more complicated.

    I suspect that it would be best if your mother's taxes were handled by a professional for 2006.
  3. #3
    CLJM is offline Member
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    Quote Originally Posted by LdiJ
    She has to pay tax on her share of the gain on the sale. The gain is her share of the sales price minus her share of the basis.

    The basis would have been the fair market value of the property at the date her last parent passed away....assuming that none of the property transferred to her until then. If part of the property transferred to her when her first parent died, then it gets more complicated.

    I suspect that it would be best if your mother's taxes were handled by a professional for 2006.


    Thank you so kindly for your answer. None of the properties had been sold until after both parents passed away. Would the tax that you are saying she will have to pay be an inheritance tax, or an income tax ?
    To futher understand....are you meaning that if, when her parents passed away the property was worth $50,000.00, her share of the basis would have been 10,000.00 ( 5 children) ...and, now, her selling proceeds share is 10,000.00---then she would owe no tax because it was a "wash" ? If this is so, how does she have to stipulate that at the time of her parents passing, the property was worth the $50,000.00 ??
    Thank you.
  4. #4
    LdiJ is offline Senior Member
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    Quote Originally Posted by CLJM
    Thank you so kindly for your answer. None of the properties had been sold until after both parents passed away. Would the tax that you are saying she will have to pay be an inheritance tax, or an income tax ?
    To futher understand....are you meaning that if, when her parents passed away the property was worth $50,000.00, her share of the basis would have been 10,000.00 ( 5 children) ...and, now, her selling proceeds share is 10,000.00---then she would owe no tax because it was a "wash" ? If this is so, how does she have to stipulate that at the time of her parents passing, the property was worth the $50,000.00 ??
    Thank you.
    Federal estate taxes are paid by the estate...not by the heirs. Therefore yes, I am talking about capital gains (income) taxes. However state taxes may be different.

    You handle that on the tax return by filing out a Schedule D.

    However, again, I do believe that this is probably one of those times that a professional tax preparer should be used.

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