How do I treat the sale of a house and what forms do I use?

The fact that your name was never removed from the house, does make you the owner of half the house while the other half would be considered as inherited.  The adjusted basis (cost) for you is 50% of the original cost of the home and improvement costs during the time you were together plus half the fair market value (FMV) on the date of death of your ex-husband.  Enter this amount as the fair market value on the date of death when asked.

• FMV is what a willing buyer would pay a willing seller in your area for the home with neither having a reason to buy or sell.  Basically, what a home like this would sell for in your area.  (If your stepson paid less than this and there is a loss you will not be allowed to claim a loss against other income.)

You can go directly to report the sale of inherited property by using the steps below.

In TurboTax (online or desktop) use these steps after you sign into your account.

1. Federal Taxes Tab
2. Wages & Income
3. Scroll to Investment Income
4. Show more
5. Stocks, mutual funds, bonds, other
6. Follow the prompts
7. Type of investment would be "everything else"
8. Description
9. Select Inheritance (important - it's always considered held long term which provides a special tax break)