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117 Responses to Do you have a Question?

  1. I have a question on the tax side of splitting up house proceeds from basically an inheritance (actually from property gifted to 4 siblings by the last wife of the father of those siblings after his death).

    Basically, this “inheritance” to 4 siblings involved preparing the property for sale, and really only 1 of the siblings could afford to pay that cost up front and so will need to be reimbursed for that. The question is when this reimbursement should occur: (A) After the sale in which all siblings get the same percentage, or (B) At the time of Sale.

    I think a lot of it is basically what can be deducted and when (and how to make sure it is clear with the IRS, e.g. what forms may be needed and how to prove such deductions), and basically to see if the situation is or is not how I describe below.

    For calculating multiplicities sake: if the house sells for $120,000 and if total up-front expenses end up $20,000…

    Option A

    Split up proceeds evenly

    Amount received Deductions Amount taxed
    $30,000 – $20,000 $10,000 Sibling 1
    $30,000 $30,000 Sibling 2
    $30,000 $30,000 Sibling 3
    $30,000 $30,000 Sibling 4

    Or would this actually be more like this:
    Amount received Amount taxed Deductions
    $30,000 $30,000 Sibling 1 – $20,000
    $30,000 $30,000 Sibling 2
    $30,000 $30,000 Sibling 3
    $30,000 $30,000 Sibling 4

    In addition, after these numbers Sibling 1 is paid back that $20,000

    Option B

    Split up proceeds including deductions paid to Sibling 1 up-front.

    Amount received Deductions Amount taxed
    $45,000 – $20,000 $25,000 Sibling 1
    $25,000 $25,000 Sibling 2
    $25,000 $25,000 Sibling 3
    $25,000 $25,000 Sibling 4

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153 Responses to Click to Tell Us Your Experience At Your Local Tax Office

  1. Oh oh, ABS thanks for the heads up! I have a huge tax issue with the IRS. To be brief, after filling an amended return for my SSDI dependant daughter that I can claim since she lives with me I was expecting a significant refund, but instead got a bill for over $1800. After reviewing my transcripts, I can see exactly where IRS made an error. Then after speaking with a couple IRS Reps in Kansas City, I got nowhere. After reading your post, I’m not very confident I will get anywhere with the Brattleboro office either. How hypocritical and incompetent of the IRS. If this were you and me treating them like that, we’d get fined and penalized to the MAX. I’m going to the Bratt office right now to see how they will ABUSE me. Wish me luck. I will keep you posted. Can we file a class action suit to sue them I wonder?

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