probate, inheritance - taxable?

[mblatour]

Hi all,

First off, let me say that this is not my area of expertise. Don't get me wrong, I'd love to learn more, but I'm not ready for what it involves at this point in my life. I'm doing some research on this but am not sure what I am looking for......so bear with me.

Client called and said that his sister passed away in 2008. She was living in her own home and had no will, no decedents. She does have 3 siblings (folks in their 60's). Client told me that the house went went through probate and that it has been up for sale for awhile now. Once the house sells, which he expects to happen in the next couple of weeks due to it's sale pending status, he said that he and his other 2 sisters will all 3 receive an equally divided share of the profit. After all other fees tied to the process are paid (realtor, probate expenses, etc.) the amount he expects to receive is around $20,000.

What responsibility does he have when it comes to taxes for this money, both on federal and state levels (Minnesota)?

I really do appreciate any direction to be given on this. I got lost looking at TTB and the IRS site.

Becky

[newbie]

The basis of the home is FMV at date of Sister's death (unless alternative 6 month date used, which it does not sound like it was).

Sale price - basis = gain or loss.

Not sure about MN.

[dsi]

And by the time you deduct the other selling costs, you end up with a loss that finds it's way from the 1041, to the 3 K-1's, and finally ends up on each of the individual's 1040, SchA.

Looks like no taxes to worry about on this one.