gslayton
Level 3
‎03-23-2023 04:49 PM

Taxpayer & son inherited real estate from taxpayers fatherr equally. Son lived in house (no rent) for years. House sold - taxpayer & son shared equally in proceeds. Proceeds reported on 1099-S. Are proceeds taxable. I'm leaning towards not but not sure. Thank you.

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Skylane
Level 11
Level 11
‎03-23-2023 05:25 PM

Each gets stepped up basis when property was inherited. 50% each. Son would be entitled to sec 121 exclusion. TP would pay gain on 1/2 sales price less adjusted basis, etc. 

this assumes your TP did not live at residence for 2 of last 5 years. 

 

If at first you don’t succeed…..find a workaround
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BobKamman
Level 15
‎03-23-2023 06:14 PM

Did the son live in the house rent-free before or after inheriting it?  Did he own his half more than two years after grandfather died?

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gslayton
Level 3
‎03-23-2023 08:20 PM

Yes, to both.

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Skylane
Level 11
Level 11
‎03-23-2023 09:38 PM

50% stepped up basis for each. IRC 121 for the son.

If at first you don’t succeed…..find a workaround
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