House sold by estate - HUD lists Gift Equity

[JAinNC]

Need to file a 1041 fiduciary return (first and final). Estate sold decedent's home for FMV -
according to probate documents from county in North Carolina value = 85,000.
The house sold within 3-4 months of death.

Executor says that the agreement with the buyer was to sell for 85,000.
HUD statement by the atttorney shows Contract Sales Price = 96,000
(11,000 more than stated)

Both sides of the HUD statement show a Gift Equity = 25,000
(This was probably done for the buyer to help him acquire mortgage.)

96,000 will be reported on the 1099-S as selling price paid to Estate.
Total distribution from the lawyer's account to Estate = 68910.
4 beneficaries.
Recap of HUD Info (rounded)
Sales Price 96,000
Settlement charges to seller 1,838
Ruduction to amt due seller (Gift Eq) 25,000
County taxes 251
Paid to seller 68,911

May I include the 25,000 as a basis because the estae surely did not receive it?
I searched this board and found a case with Gift Equity discussed at length.
BUT in this case the seller is an estate. Only need to file the 1041 because of the sale of this property. Until I looked at the HUD statement (with the facts the exector told me) I felt there would be a small LT cap loss to report that would carry to 4 K-1s.

Thanks for all your help.
Jeannie.

[BOB W]

Was the sale to a related party?????? What happend to the 85,000...???

[JAinNC]

A distance cousin

who was approved to be the buyer by the probate - because the house to be sold for FMV per tax books in that county - 85,000

He was not a benef.

The mortgage on his side of the HUD is 73,000 +.
I was going to call the attorney or the clerk of court in that county, but 1st I wanted your input.

Jeannie

[BOB W]

who was approved to be the buyer by the probate - because the house to be sold for FMV per tax books in that county - 85,000

He was not a benef.

The mortgage on his side of the HUD is 73,000 +.
I was going to call the attorney or the clerk of court in that county, but 1st I wanted your input.

Jeannie

It looks like the house was sold for 71,000, that's 14,000 below the approved selling price of 85,000.???? Something smells!!!!!

[joanmcq]

I agree something smells; he got a 'gift of equity' of $25000 but only paid per escrow over $11,000. So either he would have had to put in cash of $14000...but then why would he need a 'gift of equity', or 'cash back to buyer' as its often recorded on HUD statements here?

[BOB W]

Jan, keep us informed on how a court approved sale got reduced without court approval.?

[JAinNC]

Okay Bob

Jan, keep us informed on how a court approved sale got reduced without court approval.?

I'll call the executor and have him have the attorney phone me. Thanks for all your help.
I wish exec had called me before the sale or had own attorney handle it.

Jeannie

[BOB W]

I'll call the executor and have him have the attorney phone me. Thanks for all your help.
I wish exec had called me before the sale or had own attorney handle it.

Jeannie

Good Luck on having the attorney call you!

Didn't the executor sign the contract and didn't he realize the price had been reduced below the court allowed figure?

From what you have stated in your original post someone is in violation of a conditional court approval (order?). If I was one of the heirs, I'd be looking into a possible fraud.