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Stepped up basis and selling expenses

Business Clinic
Level 2

I am working on an estate return in which the main home and a business property both of which were sold within five months of the date of death. I have read that the stepped-up basis would then be calculated on the date of sale which leads me to believe that since the properties were sold through a realtor to unrelated parties that the sales price would be the basis causing zero gain.

I am wondering, though, if the realtor's commission could be added to the stepped-up basis which would then cause a capital loss.

I haven't been able to find anything definitive in my research and would appreciate any thoughts from the community.

Thanks in advance.

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3 Comments 3
Level 15
Level 15

Cost of sale still applies, so you usually end up in a loss situation.

Level 15

@Business Clinic wrote:

I have read that the stepped-up basis would then be calculated on the date of sale



Basis is the value on the Date of Death.  However, if an 'official' appraisal is not available and you don't have reason to believe the value significantly changed in the short time after death, it is common to estimate the value by using the sale price (assuming the sale was shortly after death).

Level 15

Common situation but a frequently asked question from those who face the situation for the first time.  The caveats usually include, "was someone still living in the house until it was sold?" and "did the rental income continue, and if so why aren't you putting it on Form 4797 as ordinary loss?"