Level 3

Question

1041 ESTATE RETURN (HOME SALE) COST BASIS - multiple owners

Forum|Forum|1 year ago
February 14, 2025
2 replies
25 views

I am not an expert in estate returns. This one to me seems a tad tricky to me when it comes to the correct #'s to use because of multiple owners and dates.

The simplest way i can explain is a Father died in 1997. Left behind a house to one of his 3 sons. Shortly after the death of the father the one whom the house was left to added his two brothers to the deed. One of the 2 brothers added to deed after death of the father has lived in the property as his primary since 1998 up until his passing in April 2022. There was no will for the deceased brother that passed in 2022. The Original son that was left the house went to probate court and became the fiduciary of the deceased brother’s estate which included his share of the home.

My question is. Upon death of the brother in 2022 the home was deeded to son 1 son 2 and son 3. The ownership structure was a 1/3rd each. The remaining two brothers/owners of the property sold the home in Dec 2024 after going through proper legal channels. What is the brother that died in 2022 correct cost basis for his estate return?

Do I use the FMV in April 2022 (as my cost basis on the 1041 for the deceased brother) plus any capital improvements and selling expenses? Or does the basis somehow get stepped up to 2024 numbers.
Im confusing myself since there are a few people involved and multiple dates to consider.
Please let me know if you need any additional info or if i didn't explain enough. And thank you for any help!

ProSeries Professional

This topic has been closed for replies.

J

jeffmcpa2010

Level 10

you said "I am not an expert in estate returns".

I tend to decline engagements where I do not have the requisite knowledge and experience.

M

MNAPAuthor

Level 3

wow very helpful comment thank you

it is for a very good client, sorry im trying help him out without sending elsewhere, it is not that hard of a return im just double checking my thought process. not sure why you even needed to respond or have the time to even respond to a post just to be snarky

J

jeffmcpa2010

Level 10

My Apolgies, I wasn't trying to be snarky.

I just have found that I sleep better when I don't take on projects that are outside my comfort zone, and sometimes I do tell a client, I am not familiar enough with X to feel comfortable for either you or I, and if you will approve it I will ask a (professional colleague), to deal with this part of your situation for this year.

That way I can sleep well, keep most of the client's work, and be certain that the new complication is taken care of comprehensively.

BobKamman

Level 15

The property was sold in 2024. At the time, it was owned by the surviving two brothers, o0r did Brother #3 have other heirs, like surviving children?. There is no return required for the brother who died in 2022. The basis of his 1/3 share would be FMV in 2022. Who received that share? Brother #1? Brother #2? Both of them in equal shares?

M

MNAPAuthor

Level 3

thank you bob. this is music to my ears, no return required

brother that died 2022 was single with no heirs

both remaining brothers are splitting the deceased brother share of the home sale equally.

fyi there was a check Issued @ closing to the "estate of deceased brother" for his share which is why i initially thought he would need an estate return filed

BobKamman

Level 15

Who cashed the check? Just because no 2022 return is required, doesn't mean a 2024 return is not required if the estate was not administered. Were there three 1099-S forms issued? I just did a return for someone who received 20% of a sale because of a beneficiary deed with five siblings sharing. Each received a 1099-S for 20% of the proceeds.

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