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Home sale reporting for joint ownership

Level 2

Hello! I have a Mother and Daughter who jointly owned a home. The home was sold in 2018. The daughter reported the home sale on her tax return for the full amount. Now my client(the Mom) has received a letter from the IRS that she did not report a home sale on her 2018 Tax return. I saw from the letter that she was issued a 1099-S for half the sale price of the home. I guess the daughter was also issued a form 1099-S for the other half. But the sale of the home was already reported in full. How to proceed? Thanks.

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Level 15

The title company issued F 1099-S to both of them, based on the joint ownership.  Therefore, the sale has to be reported on both returns for the IRS to *match* the F 1099-S information.

As to whether all the gain, or only half the gain, belonged on the daughter's return is what you, the professional, need to determine. 

You haven't provided any detail for us to opine on that issue.

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7 Replies 7
Level 8
Level 8

You're going to have to reply to the notice with a 1040X and explanation...

What was the situation?  Was this primary home for one? both?  rental property?  equal ownership? You really need more detail to ascertain how the transaction should be correctly reported; and the daughters return may have to be amended as well.

Also, a good idea to get a copy of the 1099S issued for any sale... relying on 'your clients' explanation of how they're handling something isn't always a good idea. 

Level 7

It sounds like the daughter should amend her return (if it would save her money), and mother needs to report her half of the property, whether as a primary residence or a rental.

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Level 15

(if it would save her money) "

@Greta

That isn't the criteria for needing to amend a return.  IF only half of the sale was legitimately the daughter's, then an amended return should be done.  As well as amending the mother's return to report her half.  

Lotta "IF's" and a lotta missing info.

Former Chump..umm... AllStar.
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Level 15

The title company issued F 1099-S to both of them, based on the joint ownership.  Therefore, the sale has to be reported on both returns for the IRS to *match* the F 1099-S information.

As to whether all the gain, or only half the gain, belonged on the daughter's return is what you, the professional, need to determine. 

You haven't provided any detail for us to opine on that issue.

Former Chump..umm... AllStar.
"the game of life is hard to play"

If a post answers your question, click on *Accept as solution* for future searches

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Level 15

As Bruce said, seeing the Form 1099-S that are issued is always important.  Plus, the closing statement had to have had BOTH names on it as seller as two F 1099-S were issued.   

Former Chump..umm... AllStar.
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Level 2

Thank you for the responses. Yes, they both lived in the home a their primary residence. We will send an amendment to report half the sale of the property to match the irs record. I will advice the daughter to amend her tax return to report only her half of the sale.

Level 15

@karteroko wrote:

Thank you for the responses. Yes, they both lived in the home a their primary residence. We will send an amendment to report half the sale of the property to match the irs record. I will advice the daughter to amend her tax return to report only her half of the sale.


It's more than that.  Bruce and Anna have asked some pertinent questions you still need to find the answers for.  Both the mother and daughter may have been living in that home and both may be on the title but were both equal equity owners of that home?

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