Question

Sale of an inherited business that only have a % interest in

Forum|Forum|4 years ago
March 29, 2022
1 reply
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Wife inherited a % of Father's business 12 years ago. Business sold in 2020 with payments in 2020 and 2021. When entering sales price of sale, Turbo tax charges sale 100% to our return. How do I fix?

A

Anonymous_

Employee

It appears to be almost a certainty that you did not enter your basis for the business (which would be subtracted from the selling price).

The issue now is whether or not you had the business appraised (valued) on the date of your father's death since that would likely be your basis.

B

BillfippAuthor

Where am I to put the appraised value of when she took ownership. I do have it. She was also only a 16.7% owner of the business. The business sold for $500K and the appraisal done back in 2010 estimated the value of the building and land as $315K. I'm doing something wrong because it has her owing $109K in Federal which can't be the case when only got 16.7% of the total sale. Also the sales started in 2020 and finalized in 2021 so half she got last year and half this year. Her payment or the sale in 2021 is only $40K. What the heck am I doing wrong?

A

Anonymous_

Employee

This appears to be an installment sale so you need to complete Form 6252.

However, the sale now appears to involve real estate and also other business assets so, presumably, Form 8594 should be completed (or should have been completed by the parties).

You should really consult with a local tax professional at this point.