I haven't seen any reports of cases where IRS matches 1099-S amounts to returns.  That doesn't mean it's not happening, but even the "Automated" Underreporter system involves human review of every case before a notice is sent.  I realize I am in a minority when I refuse to play "trick the IRS computer," but I just don't like signing a return that has an incorrect cost basis just because the 1099-S is wrong.  I would report the sale as "50% interest in co-owned property" and attach an explanation -- it won't be read when the return is filed, but there's a good chance someone will read it if the automatons notice a discrepancy.