Client received form 1099-S from sale of his mother's house. Mom died in 2005 and client/son was listed on the warranty deed. The sale of the house occured in late 2005. Is this house considered inherited property? If so, I guess I would prepare Sch D and compute a gain for the 1099-S amount less the FMV at the time of Mom's death. If this house is not considered inherited then I'm not sure how to handle it. Any suggestions?
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Was the mother’s name also on the title to the house so that both the mother and son were joint tenants? If so, did the son pay anything for his share of the house?
Assuming the mother and son were listed as joint tenants with right of survivorship, and the son did not contribute anything for his share, then the entire value of the house must be included on the estate return for the mother, and the joint tenancy gift to the son turns into inheritance with full step up of basis at the death of the mother. In that case, you would zero out the transaction on Schedule D and write in “inherited” under the acquisition date.
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