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Tax Law (Questions About Taxes)/Sale of hp,e in trust from inheritance

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Question
My father died in 2008. Their are two siblings my sister and myself. The stocks were distributed back in 2008 equally to the two siblings while the home was put up for sale. The home was finally sold in the summer of 2012. The home was valued in 2008 at 300,000 but finally sold in 2012 for 220,000 as the market had declined in that area. Thus the value of the home declined by $80,000 between 2008 and 2012 while still in the trust. My sister is saying we can each take a $40,000 loss on the sale of the home from the trust. Is that true ? It really does not make sense to me because it is the last of the inheritance from the trust. Please give your thoughts.

Answer
Bob,

Thanks for your question.

When you receive inherited property, your basis in the property is the fair market value as of date of death.  Therefore, your basis would be $300,000. Selling it for less creates a long-term capital loss which you can deduct on your 1040.  Because is is a capital loss, you can use the loss to offset capital gains plus $3,000. Any  unused loss carries forward indefinitely until used up.

Hope this helps.

John Stancil, CPA

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

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I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

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DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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