How do you report the sale of a rental property if the mother owned it but added her three kids to the deed? All four people received a 1099S?

Forum|Forum|3 years ago
April 4, 2023
2 replies
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Best answer by taxes96786

IMO... if kids were placed on the deed 20 years ago then they are each 1/4 owner. Each has a basis of 1/4 FMV at time of transfer. 1099s needs to be reported and sales amount allocated by percentage to each.

That only mom reported Sch E over the years is not relevent.

BobKamman

Level 15

Only one of them had been reporting the rental income and expenses? When were the kids added as owners, ten years ago or ten days before the sale?

C

chiodoincAuthor

Level 5

Yes only the mother was reporting the income. She had the property for 30 years and added the kids on 20 year ago.

BobKamman

Level 15

I would report the entire sale on the mother's return and suggest to the kids that they file nominee 1099-S forms directing the proceeds back to her. Substance over form.

T

taxes96786Answer

Level 8

IMO... if kids were placed on the deed 20 years ago then they are each 1/4 owner. Each has a basis of 1/4 FMV at time of transfer. 1099s needs to be reported and sales amount allocated by percentage to each.

That only mom reported Sch E over the years is not relevent.

BobKamman

Level 15

What may be relevant is that the kids have been in a 30% tax bracket for decades, Mom has been in a 0% bracket, and they have successfully assigned their rental income to her. I would say they get away Scot free, but there is some question lately about how much the guy with the Scottish mother will get away with.

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