surviving spouse award help

[arlo]

Surviving spouse award of 20,000 from the sale of her deceased husbands house which she was not an owner. Is this taxable income or not.
Thanks for your input

[Burke]

Award? Why did she receive the money? Did he leave it to her in his will? If it was in his name, did he qualify for 121 exclusion? Is she filing an MFJ return? When did he die? When was house sold? More details pls.

[arlo]

surviving spouse award

His wife was not on the title of the house. She could live in the house as long as she wanted but, if it was ever sold his will give 50% to her and the rest to his children
she got a k-1 for her 50% but also got a $20,000 surviving spouse award. That is what the estate attorney called it. I am thinking the wife would get a stepped up value at time of her husbands death.

[Burke]

House was sold by the estate? She was not the owner, but a beneficiary of his will for 50% of the proceeds based on this information. I am at a loss as to why this is taxable income to her at all since it is an inheritance, and as such, why a K-1 was issued. This is not a Life Estate situation, but a Right of Occupancy. The executor of the estate controls the asset and the spouse has no rights of sale. Estate would have stepped-up basis, not the spouse. As far as this "spouse award," it looks like that is additional proceeds paid by the estate. I would have no clue what this is or how it may or may not be treated on her tax return without discussing it with the attorney and/or reviewing the will. Would advise your client to provide that document, and you both have a conference call with this guy. Also, would appreciate any feedback on this case once you have resolved it. Very interesting......