The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies


Subject:  Re: Capital gains tax for an estate? Date:  7/5/2012  11:35 PM
Author:  Wradical Number:  116400 of 130714

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.

Copyright 1996-2020 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us