1099S for decedent

[sdarave]

Lion: Yes, it was rude of me to not continue the post I deleted. Apologies.
Client came in just before deadline for filing. She is the Personal Representative for her deceased father. California probate is closed. Decedent passed in August 2021. Client received a 1099S reporting the sale of decedent's residence which happened in August of 2022. The 1099S is for "the estate of.........". I can find no way to claim the Exclusion for personal residence in form 1041. This was inherited property and shouldn't create a capital gain but that 1099S pretty much ties my hands. The residence was never used as a rental, and was not occupied by the inheritors at any time.

[Lion]

Can you let us know for our collective edification, please?

[FEDUKE404]

Lion: Yes, it was rude of me to not continue the post I deleted. Apologies.
Client came in just before deadline for filing. She is the Personal Representative for her deceased father. California probate is closed. Decedent passed in August 2021. Client received a 1099S reporting the sale of decedent's residence which happened in August of 2022. The 1099S is for "the estate of.........". I can find no way to claim the Exclusion for personal residence in form 1041. This was inherited property and shouldn't create a capital gain but that 1099S pretty much ties my hands. The residence was never used as a rental, and was not occupied by the inheritors at any time.

I truly do not understand your query or your perceived problem.
To the best of my knowledge, there is no $250k / $500k sale of personal residence exclusion within an estate. Unless I am misreading your post, the property sale occurred after the death of the decedent.
The Form 1099-S generally reports GROSS proceeds (in most cases the contract price) from a sale of a property, and you have already noted it shows "The Estate of. . ."

[Lion]

And, the estate gets a step up/down on DOD (or alternate date, if used for estate tax purposes). If probate was closed and the tax returns filed for 2021, you have the cost basis. You have all the pieces you need to file the 2022 Form 1041.

[Snaggletooth]

Unless there was a perceptible difference between the Fair Market Value and the final net selling price, as a practical matter I would report zero gain/loss on the 1041. If a known difference is small, IRS is not interested in looking at it. Not a "pure" answer, but a practical one.

[Lion]

You want the selling price to match the Form 1099-S, and you want the cost basis to match the value on the estate tax return. The gain/loss will be what it will be.

[FEDUKE404]

You want the selling price to match the Form 1099-S, and you want the cost basis to match the value on the estate tax return. The gain/loss will be what it will be.

NOTE: The "selling price" (after various allowable closing costs of the sale) will likely be less than the amount shown on the Form 1099-S, which in most cases reflects the CONTRACT (gross) price.

[Lion]

I keep the selling price as the selling price and make all adjustments to cost basis to make it as easy as possible for the IRS to match the Form 1099-S amount their computer is looking for.

[Uncle Sam]

I do the same as Lion.

[Rapid Robert]

If there is a 1099-S, I follow the Form 8949 instructions, which tell you exactly how to report it, including where to put the cost of sale amount and how to indicate what it is.

[Snaggletooth]

Unless there was a perceptible difference between the Fair Market Value and the final net selling price, as a practical matter I would report zero gain/loss on the 1041. If a known difference is small, IRS is not interested in looking at it. Not a "pure" answer, but a practical one.

Often a decedent's home will be sold to a family member, at significantly lower than FMV at death. Before reporting a loss make sure you are not violating the rules for taking a loss on a family member. Some are perceived to be family members, but are not according to the IRS definition.

[Lion]

See the chart on page 10: https://www.irs.gov/pub/irs-pdf/i8949.pdf