How do you Report the Sale of a Rental Property by 2 owners with a 1099-S issued to each owner for full amount?

Forum|Forum|3 years ago
May 31, 2023
2 replies
26 views

The Rental Property was owned by a brother and sister and sold in 2022 for a total of $230K.

Each owner was issued a 1099-S for the full amount of the Proceeds $230K.

Where is the adjustment made on the 4797 for the co-owner's cost and gain on sale?

Is it form 4797 part III line 21 or is there a different way? Used the asset entry for and entered it in disposition asset gain or loss basis.

Thank you!

ProSeries Professional

This topic has been closed for replies.

Best answer by Just-Lisa-Now-

If you cant get the 1099S's corrected, Id go with your plan to adjust basis to create the correct gain/loss on the sale.

IRonMaN

Level 15

Either it was really sold for $460K or the 1099S forms are wrong.

Slava Ukraini!

A

AB92_2Author

Level 3

Unfortunately, the 1099-S are incorrect.

Just-Lisa-Now-

Answer

Intuit Community Champion

If you cant get the 1099S's corrected, Id go with your plan to adjust basis to create the correct gain/loss on the sale.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

BobKamman

Level 15

Were both names on both 1099-S forms? Escrow company might have thought they were husband and wife.

A

AB92_2Author

Level 3

Hi Bob,

Unfortunately, they were not. Each was issued a 1099-S for the full amount of the sale. I can come up with the correct gains by adjusting the cost basis. I believe this is the best way, since if I report the correct amounts, there will be IRS correspondence. Do you agree?

BobKamman

Level 15

I haven't seen any reports of cases where IRS matches 1099-S amounts to returns. That doesn't mean it's not happening, but even the "Automated" Underreporter system involves human review of every case before a notice is sent. I realize I am in a minority when I refuse to play "trick the IRS computer," but I just don't like signing a return that has an incorrect cost basis just because the 1099-S is wrong. I would report the sale as "50% interest in co-owned property" and attach an explanation -- it won't be read when the return is filed, but there's a good chance someone will read it if the automatons notice a discrepancy.

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