Tax Basis of Inherited Real Estate at sale

Technical topics regarding tax preparation.
#1
Jake  
Posts:
1384
Joined:
12-May-2014 3:19pm
Location:
Columbus, Ohio
Date of Death Value of residence in Ohio for Probate filing/accounting purposes can be the Auditors value, or you can get a formal appraisal and use that. Most elect to save the $400 appraisal cost and use the Auditor's value. In an Estate Inventory I used the Auditor's value. The residence will likely be sold for 110% of that Auditor's value about 6 months after the date of death. The client's CPA is telling the client that we need to amend the Estate Inventory value to avoid the heirs paying any capital gains. I am 99 44/100% sure that for a sale within 12 months of DOD the IRS will accept the sale price as the DOD value. [Moreover I think that the heirs can have a loss attributable to expenses of sale.] Looking for support here.

[There will also be an appraisal as it is required by the buyer's lender - my experience is that it will come in at the sale price to support the lender's 80% loan]

There are 5 heirs, siblings. The 4 are selling their 20% share to the 5th sibling. Not going to claim any loss on the 5th sibling's return of course. In fact I will not be preparing any of those personal returns. The home will be transferred to the 5 siblings, and then the sale will take place. The reason the home is not being sold from the estate to the sibling is that he is the executor and Ohio law is very strict on self dealing by a fiduciary even when all the heirs are on board.
 

#2
keiser  
Posts:
226
Joined:
19-Nov-2018 5:19pm
Location:
HI
You are thinking of 26 U.S. Code § 2032 - Alternate valuation.
 

#3
Jake  
Posts:
1384
Joined:
12-May-2014 3:19pm
Location:
Columbus, Ohio
Sec 2032 has to do with an election on an Estate Tax return. The 12 month sale post date of death value is something I remember from Legal CLE courses. I think it may be part of the IRS examination compliance manual.
 

#4
Noobie  
Posts:
1134
Joined:
22-Apr-2014 1:35pm
Location:
Jacksonville, FL
I thought it was within 6 months of death to a non-related party.
 


Return to Taxation



Who is online

Users browsing this forum: CaptCook, CoastalCPA, Eduardo, golfinz, Google [Bot], Google Adsense [Bot], itssewtaxing, JoJoCPA, JR1, Nilodop, rbynaker, Seaside CPA, SumwunLost, TaxDude, Treetopclimes and 194 guests