Court Judgment of Possession took 10 years for Beneficiary to receive title to inherited property: Home (vacant for the 10 years).FMV at dod =$130,000. Sold for $200,000. New Question! Can any of the $60,000 (never deducted by the estate) paid by the Bene during the 10 years of contestment be added to basis as capitalized legal costs? Legal expenses related to acquire, perfect, defend, or clear title to property are capital expenditures.

Contested Property: Beneficiary Inheritance: Gain or Loss Court Judgment of Possession took 10 years for Beneficiary to receive following inherited property: Home FMV at date of death (2012) = 130,000. Misc. (tractor + truck) FMV at date of death (2012) = 22,000. Due to inheritance being contested, it took 10 years for court settlement. Home FMV at date of court settlement (2022) = 210,000. Misc. (tractor + truck) FMV at date of court settlement (2022) = 5,000.00. Home sold in 2022 for 200,000. Misc. sold for 6,000. QUESTIONS: What is basis of each? What is reportable tax gain or loss of each?

Background: Form 1041 Fiduciary Tax Return for tax year 2020 only source of income was Form 1099 Royalty. Depletion was limited by 65% taxable income producing a c/o of depletion to tax year 2021. In 2021, the Estate closed Oct. 2021. Form 1099 Royalty income was reported for entire year. This amount along with expenses was prorated 90% to the Estate and 10% to beneficiary. QUESTION 1: How to calculate depletion for Form 1041 given the following: c/o from 2020 = $1,000. Non-limited depletion (at 15%) for 2021 BEFORE c/o and BEFORE proration = $2,000. Is depletion = 1,000 + (2,000*0.9) = 2,800? or (1,000 + 2,000)*0.9 = 2,700? QUESTION 2: How to calculate depletion for beneficiary. If c/o is prorated (2nd calculation above) Is beneficiary eligible for remaining c/o? Depletion = 0 + (2,000*0.1) = 200? or (1,000 +2,000)*0.1 =300?