1099-S

[Brainstrom]

 I have a new client who received a 1099-S for proceeds from selling a home she inherited years ago. She set up a Trust for the proceeds to go to with an EIN number but the 1099-S she received is in her Social Security number. My guess is that the selling title company should do a corrected 1099-s with the proceeds going to the Trust. Then a Trust tax return will need to be done. 

Do you agree or is there a way in the tax return(1040) that I can get around this? Right now it looks like she has a gain from the sell on her personal return.

Thank you

[Just-Lisa-Now-]

If she personally inherited it, then she personally sold it, how does the trust figure in?

[Brainstrom]

I am guessing that she did not want to pay tax on the sale, so she set up a trust to put the money into. Just like rolling over an IRA instead of cashing in and paying taxes.

Please correct me if I am wrong!!! This one is over my head. 

If she does have to claim it personally I put this on a Schedule D?

[Just-Lisa-Now-]

then the trust would pay the taxes (which is higher than personal taxes) or the beneficiary of the trust will pay the taxes, same as where she is now.

This is a personal sale that goes on Sch D and her own 1040.

Someone gave her bad advice to create a trust to puyt this money into, it doesnt save any taxes.

[IRonMaN]

If the 1099S has her Social Security number on it, are you sure the title wasn't put into a revocable instead of an irrevocable trust?

[Brainstrom]

Living trust

[IRonMaN]

That could be revocable or irrevocable.  Have you seen the actual trust agreement?

[JRC]

To many unknowns here.

[abctax55]

".....Just like rolling over an IRA instead of cashing in and paying taxes."

Selling an inherited house has NOTHING to do with IRA rollovers.

Who created this trust?  Was an attorney (or at least LegalZoom) involved?  When (if?) was title to the property transferred to the trust?  Why wasn't the Title Co informed a trust was the owner, so the F 1099-S could be issued in the Trust EIN.

Just obtaining an FEIN does not a trust create.

I agree with @JRC , more questions than answers here.

[qbteachmt]

Every time you mention it, the trust was created to hold the proceeds. Not that the house was put into the trust and then sold by the trust. The owner sold the house, and you need to look at the deed for owner = human or owner = trust.

[Brainstrom]

Let me clarify, like i said this one is over my head. 1.In May 2012 my client inherited a home. 2. In Dec 2021 she sold the home and developed a trust, giving half of the proceeds to her brother and her half she set up a trust( A living trust) which i have not seen. 3. She received a 1099-S for her portion of the proceeds in her Social Security number.

I can record the proceeds on a Schedule D, i guess

[TaxGuyBill · Accepted solution]

SHE sold the house, not the Trust.  So the Trust has nothing to do with reporting the sale.  And it doesn't matter what she did with the proceeds of the sale - it is still reported on her personal tax return.