How do i report the sale of a home that was originally quit claimed to 2 siblings in 2010 and sold in 2018. There was no 1099-s issued.

[brenda4672]

Client and his sister sold their fathers home and the proceeds were split between them.  The home was previously quit claimed to them 8 years ago.  client has not received a 1099-s nor has his sister. the home was sold at a loss, but was not a primary residence for them nor a business property. Shouldn't there  be a 1099-s ?? Are we being impatient?

[TaxGuyBill]

The fact that it was "quit claimed" in 2010 means very little.  You need to find out more.

For example, did the father continue to use the home after that?  What about the client and sister, did they use the home?  What was the purpose of the "quit claim"?  Was it actually sold to the kids, or was the title just transferred?  Was the father still on the deed as well?

Was the house sold because the father died, or is he still living?

When you say it was a "loss", how did you arrive at that conclusion?  What did you use for the Basis?

[brenda4672]

Thank you, I will ask the additional questions.  I know the father went into a nursing home, but I do not know when. The client brought in the quit claim deed and a print out from the local tax office showing the value of the property at the time of the quit claim.  I used this as the basis.  There was no actual money exchanged at the transfer.  

[CMS_VA_CPA]

How was the property used since the quick claim in 2010?

If quick claimed to the siblings and no money changed hands, it sounds like a gift to them.  A gift tax return should have been filed in 2010 and the basis to the siblings would be the father's basis.  Whether or not there is a gain or loss depends on the gift gain/loss rules and the character of the property use since 2010.

[TaxGuyBill]

But it sounds like a Life Estate could have been involved, which would affect the Basis and possibly who owe any tax.

Another question to find out that could possibly affect things ... if the father did NOT die, who is receiving the proceeds of the sale?  

[brenda4672]

The brother and sister each got 1/2 of the proceeds. $47324 each

[brenda4672]

More information received and now I'm completely at a loss as to what to do.  The property was quick claimed to the brother and sister in 2006  for consideration of 1 dollar with life use for the father retained. There was no gift tax return filed. The father went into a nursing facility in 2010. The property remained vacant for 2 years as it became apparent that the father would not be returning the children decided to sell the home. The  life use was removed and the property was put up for sale.  Property finally sold in 2018. Proceeds of the sale was split between the brother and sister. A 1099-S was file showing the proceeds received by each. (The closing attorney will be providing a copy, but I have not seen it).  How do I report this?

[TaxGuyBill]

The short answer is to use the father's Basis (well, divided by two for each sibling) and report it on Schedule D/Form 8949.

The longer answer is that when the Life Estate was formed in 2010, the kids received PART of it (gift) and the father kept PART of it.  When the Life Estate was removed, the father gifted the rest of his ownership (and the rest of his Basis) to the kids (and the father should have filed a Gift Tax return at that time).

[brenda4672]

Thank you so much! I can't wait to get this off my desk!

[George4Tacks · Accepted solution]

The 1099S depends on the amount and how the paperwork was filed. "sold at a loss" even if you take into consideration the the quit claim gives the basis of the home in the hands of the father? I would go ahead and file a return for each of the people showing the sale of the home. Indicate no 1099B was received. It sounds like it would be a personal loss and not a capital loss (if it really was a loss) and not deductible. If it is a gain it would be a long term gain. You need to possibly get more information. 

[rbynaker]

  Also, in many cases if you look hard enough you'll find a 1099-S buried in the 300 pages of closing docs that they signed at closing.  The last property I sold was like that, nothing "extra" provided at year-end, just a 1099-S page mixed in with everything else (I'm savvy enough to be looking for it but I suspect most taxpayers are expecting something to arrive in the mail in January, when that doesn't happen then they "never" got the form.)

Rick