Adjusted basis (increase) not flowing in 1041.

Forum|Forum|3 years ago
June 20, 2023
2 replies
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New client. The parent dies in 2022, PR is son. Son, PR, has come to me.

House got an appraisal, and sold, at a loss. 1099-S issued with the same value as appraisal. I entered data from both on the "home sale worksheet". All comes up fine, except, PR had refurbishments/repairs/improvements done on the house prior to the sale. All total to line 8, "increases to basis", but not flowing to Part III, bottom of page "adjusted basis of home".

"adjusted basis of home", Part 2, Section A, questions 1. The figure is data input from 1099-S.

Am I missing something, doesn't the improvements to the capital asset (not rented, or lived in after DOD) increase the basis entered in on Part 2, section A, question 1? If so, why are improvements ($50k) not flowing and being added to it? Have I checked/not checked some box some where?

ProSeries Professional

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Best answer by Just-Lisa-Now-

Ive always just used Sch D for this situation too.

Accountant-Man

Level 13

Basis isn't input from anywhere except by the Preparer. 1099S only has the sales price.

If the property was sold very shortly after the death, then the stepped up basis is probably good enough. Deducting the selling expenses can result in a loss.

If there were improvements made before the death, then the stepped-up basis includes them.

If there were improvements made AFTER the death, but obviously before the sale, then the stepped-up basis(FMV at death) PLUS improvements goes into the basis, since the FMV was made at DOD. But then you need a DOD appraisal before the improvements were made.

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T

treasur2Author

Level 4

I agree with all.

Yes the improvements were made after DOD, but before sale, so that's why....and what......I'm asking about. That is. Why is the software not allowing the improvements to increase the basis as input via the input field of the stepped up basis.

BobKamman

Level 15

Trusts don't live anywhere so you shouldn't be using a "home sale worksheet." Just put it on Schedule D. The 1099-S just shows the selling price, it has nothing to do with the appraisal. Was the appraisal done before or after the improvement were made? The loss should equal the selling expenses plus the improvements made after the appraisal, assuming the sales price was the same as the appraisal value.