Do I Owe MO Capital Gaines Tax?

[anteater]

Look, you are very confused and you need to consult with a tax professional.

Not exactly, the are asking me to pay $2700 based solely on the $45K that was reported as income rec'd in 2003. They do not know anything about the sale of the house yet.

They know about it. Why do you think that they are asking for the tax? What they don't know about is the cost basis because you did not file a return. Therefore, they assume that the whole enchilada is taxable income.

 

[davew128]

Not exactly, the are asking me to pay $2700 based solely on the $45K that was reported as income rec'd in 2003. They do not know anything about the sale of the house yet.

_I_told you to file a tax return showing the correct capital gain on the property. This is the third time, more if you count other posters.

 

[Soconfused121]

I am actually confused on the ownership trail and would like OP to clarify some things for us.

1) Who inherited the house when the relative died?
2) How did you "acquire" it in 2003?
3) How were you "helping out relatives"?
4) How was the money divided?
5) What was the stated value of the house when it went through probate?

I tried to send you to a tax pro when you first posted, because there are lots of unanswered questions that effect how the taxes work. Please answer all of those questions.

LdiJ......would you please review my answers to your questions here, and respond as soon as can. Thanks.

I appreciate everyone's help, I just can't afford to consult with a professional at this time. And I'm still holding out hope that there was no real capital gain made here...especially since the money was divided up.

 

[LdiJ]

1. The owner had no will. Probate granted house to his surviving wife and children....His children (adults) didn't know how to sale the home. They hired a real estate agent the year of death (1995), but couldn't sell it and didn't want to do improvements...and didn't want to keep paying the taxes....so they basically just let it sit. They were going to lose it due to tax delinquencies. They no longer cared about this house.

2. I offered to try to sell it as opposed to just losing it. They deeded it to me via quitclaim. I paid the property taxes and spent approx $5K on improvements.

3. At closing, I only received a check for $37K (not the $45K due to trumped up broker fee's, etc.)

4.Out of this $37K, I distributed $18K to children of the descedent (orig owner's wife died right after he did). I have copies of the ck I rec'd at closing and copies of cashiers cks to each child of deceased. $10K stated prob value

I think that you can make a case that you bought the house from the heirs for 18k plus the past due property taxes, despite the fact that you did it in a bassackward way.

Therefore your basis would be 18k plus the past due property taxes, plus the costs of the improvements.

So, your capital gain would be 37k minus 18k, minus the past due property taxes, minus the cost of improvements. If the taxes and improvements were 10k that would make your basis 28k, so your capital gain would be 9k. Those numbers are examples...you need to use your real numbers.

You would need to file both a federal and state tax return for the year in question. In the off season you could probably find a tax professional to handle this for you for 100.00 or less.

 

[Soconfused121]

Thank you so much LdiJ....and all who contributed to my nightmare. You all have been most helpful....I don't know how I stumbled on to this site, but it has been a wonderful blessing!!!