Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (20) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: karenlj Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Re: Capital gains tax for an estate? Date: 7/6/2012 11:50 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
My mother died 4 years ago. We're finally selling her house in Texas, which is worth quite a bit more than when she died and one heck of a lot more than when she and my dad bought it. The house is still part of the estate, which has not yet been closed.

Phil's questions in an earlier post are pertinent, but I take it from this info. that the house was titled in your mother's own name, and that's why it's in the probate estate.

How is this profit handled?

It is reported on Form 1041, Schedule D

Does the estate, with no income, pay capital gains tax?

Yes, if that's the only income item, AND the gain is not considered distributed/distributable to the beneficiaries (which it would be, on the estate's final return.)

Does it pay tax on the profit from date of purchase or profit from date of death?

Generally, from the date of death. The estate, like an individual heir, gets a basis equal to the date-of-death value.

Or do the heirs pay tax on the profit from date of death?

They will, if it is the final return of the estate OR if distributions are made, which serves to carry the gain out as taxable to them. Distributions of income, including capital gains, are reported to each beneficiary on a K-1 schedule.

Bill
_____________________________________

Yes, the house is still in my mom's name. The estate has filed tax returns each year and paid property taxes. After closing, the final tax return will be filed and the assets distributed. Per the will, the assets will be equally distributed to the heirs.

In this case, as the next return will probably be the final return, the estate won't pay capital gains tax but the heirs will? Surely the estate and the heirs wouldn't both pay capital gains tax on the same asset?

Thank you.

Karen
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (20) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
Post of the Day:
Macro Economics

Intel's Broadwell Potential
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement