sale of inherited property

[kimberlyjo]

House was inherited in 2001. And paid inheritance tax.
Client started renting it in 2003.
Client has sold inherited property in 2014. Because I am not sure on the "Inheritance" rules,
Does this sale get reported on his income tax return?



Client is also holding the mortgage and receives interest income from buyer.
Confirming that the interest received goes on Sch B as "Seller Financed Mortgage Interest"

[ATSMAN]

Yes! Disposal of business property because it was used as a rental property after taxpayer inherited it. The basis would be the stepped up value with adjustments for improvements, depreciation, selling expenses etc to figure out CG.

[Burke]

And assuming it is a gain, then report that on 6252. You are correct on reporting the interest on Sche B.

[kimberlyjo]

This sale is reported on Form 4797?

Yes! Disposal of business property because it was used as a rental property after taxpayer inherited it. The basis would be the stepped up value with adjustments for improvements, depreciation, selling expenses etc to figure out CG.

This sale is at a loss, Am I correct to say this is to be reported on Form 4797?
Thanks, I appreciate you.
Have a great day!

[kimberlyjo]

Not a gain...

And assuming it is a gain, then report that on 6252. You are correct on reporting the interest on Sche B.

This sale is at a loss. Am I correct to say that the sale is reported on 4797?

Thanks, I appreciate you. Have a great day!

[Burke]

That is correct, no gain, no 6252. Direct to 4797. Although if he has been depreciating it since 2003, it is hard to imagine that he still has a loss!

[kimberlyjo]

That is correct, no gain, no 6252. Direct to 4797. Although if he has been depreciating it since 2003, it is hard to imagine that he still has a loss!

Thank you for your help. Have a great day!

[taxmom34]

it sounds like you are still not sure this should be reported on form 4797. how many professionals do you need to agree before you believe them. I agree with both who responded. and find it hard that you still have a loss.