My mother died in January 2006. Her will left the $750,000 residence (her only asset) to my brother and me. All of her income (retirement) stopped the day she died.
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If she had any taxable income in January (see rules about amount) you should file a 1040 for her for the time she lived in 2006. If income limits are more than she received, no 1040 is necessary. Any gain on the house would be 1/2 on each of your 1040s, Schedule D because the sale took place after changing title (hence, after istribution from the "Estate". Since title transfered virtually at DOD and there was no other income, no 1041 is reaquired either. Your basis in the house (to comopute each of your gain/loss for the sale) is the appraised value at DOD (hope you got an appraisal). If not, possibly you could contend the value didn't change from DOD to date of sale, in which case you each have a small loss of closing costs and commission for the sale. Value of Estate below Estate Tax Exemption so no Estate Tax form is required. You probably don't have to file anything for her.
ed
Thank you ed. Very clear and very helpful. I appreciate it.
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