Schedule D cost or basis

[s_applegate]

1st time user of Lacerte and trying to complete a final 1041 with 2 beneficiaries.  The only asset disposed of is property which was acquired by the estate Jan. 2020 and sold Oct. 2020 for $270,000 as stated on a 1099s.  No appraisal was done and this was the listed price.  Would this be both the sales price and cost or basis?  They also had sales expenses that I itemized on the worksheet.  When I enter it this way, the K-1's show 11E & 11F as $10,280.  The beneficiaries actually received cash in the amount of $243,000 at 50/50 which was the proceeds.  Do I leave it as the $10,280 or do I need to manually change it to $121,500?

[PhoebeRoberts]

IMHO this is not a "how to use Lacerte" question; it's "how do I prepare a 1041" question.

1) Basis for inherited property is FMV on the date of death. You have more information than any of us have to determine that amount; your client has even more than you. Depending on the market, DOD FMV may be significantly higher or lower than the sales price 10 months later. 

2) 11E and 11F are NOL carryovers for regular tax and AMT. I'm not sure what worksheet you itemized expenses on; selling expenses would normally go on the Screen 22.1 field labeled "expenses of sale or exchange." That, in conjunction with checking the "inherited property with stepped up basis" box, gives you the expected Box 11 Code D, unused long-term loss carryover under IRC 1212.

2a) If any beneficiary had any personal use of the property between date of death and sale, the loss becomes a non-deductible personal loss.

2b) If the property was rented out to a non-beneficiary at FMV, you have an entirely different fact pattern and tax presentation.

3) You enter the distributions, either as percentages or dollars, in Screen 7.

4) A distribution does not create an NOL carryover, or any other type of deduction.

5) 1041s (either estates or trusts) are not simple returns, even when there's minimal activity. The forms are not particularly intuitive, the presentation isn't necessarily logical, and the instructions aren't that helpful, either. You kind of have to know what the right answer is, and you do not know what the right answer is. You would be doing your client a disservice by preparing this return without someone more experienced to walk you through it, and should partner with someone local to you to make sure it gets done right.