Selling Inherited Property
It is mandatory that you determine the taxpayer’s basis in a property first before you can determine whether the sale of an inherited property is subject to tax.
A property that is inherited from a decedent who dies before January 1st of the present tax year normally has its basis as its fair market value (FMV) on the date that the decedent died.
The basis of property that is inherited from a decedent who dies within the present tax year is normally the lesser of either the adjusted basis of the decedent or the FMV of the property at the date of the death of the decedent.
The holding period starts on the date of the death of the decedent. Inherited property is regarded as a long-term property. In the event that you either sell or dispose of inherited property that is a capital asset, you will have a gain or loss that is long term from property that was held for a period exceeding a year, regardless of the time you held the property.
To report the sale of inherited property in the tax program:
- Go to the Main Menu of the Tax Return (Form 1040)
- Proceed to the Income Menu
- Then to the Capital Gain/Loss (Sch D) section
- Select New
- Enter the Description of Property
- Enter the Date Acquired then choose Inherited - Long-Term
- Enter the Date Sold, Sales Price and the Cost (FMV on the date of the decedent’s death)
Note: This is not tax advice. It is a guide on how to enter the sale of Inherited property into the Taxx Savage Pro Program.
Additional information:
Instructions for Schedule D (and Form 8949) - Capital Gains and Losses