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Originally Posted by colez715
#1; I was left an inheritance from my grandmother back in 2008 that was in my uncles care. I didn't learn of it until 2011. He never filed taxes for it and now im being charged 39,000+ from the IRS for not including the information on my tax returns ( I only included my work wages being that I did not know of the income). They said I have to fill out a 1040x and include my loss and gains so they can recalculate what I owe. My inheritance was 72,000 and it was put into different stocks, I guess they are charging tax on the whole 72,000 instead of my gains and losses?
#2;The stocks were bought out in 2010. Well, I have the 1040x and I am so confused. I don't see any options to where it even states anything about stocks or such. I really need to complete this on my own as I don't have the funds to pay a tax specialist. Can someone please help me rectify this situation. Is there another form? Am I filling out the wrong one? I really appreciate any help. It will be a huge weight off of my shoulders! |
#1;No. basically, Inheritance reporting is a tricky issue. However,it depends. In inheritance cases it depends on what type of income it is and if it has earned any income since you inherited it or not. The value of the stock,fmv of $72k, stepped up basis , I mean, you inherited from your GM is not considered income and is therefore not taxable. However, any income you receive from the property after you inherit it is taxable, if it is loss, then you may deduct loss,i.e. cap loss on your return unless it is personal loss. With an inheritance, you get what is called a stepped-up basis for tax purposes as said above. Your basis is established at the fair market value of the stock on the date of death of the donor, your GM.you do not pay tax on the basis of $75K. The IRS requires that all income be reported in a tax return, and failure to do so can result in many penalties. Most penalties can be waived if you can convince the IRS that you had reasonable cause for not reporting the income and didn't understand that you needed to report that income on your return. However,if you sold the stocks, then, needed to fill out a Sch D/form 8949 when you filed your taxes and under the title Long Term Capital Gains and Losses where it says Date Aquired you put "Inherited" and the cost basis starts from the Date OfDeath instead of when your GM actually bought the stocks. So if you sold them right away and there was no capital gains you do NOT have to pay any tax on your inheritance.
You may need to fill out an Amended Return 1040X and submit it for the year of 2008 and make the changes that you stated above so that the IRS does not count the $72k as your income when it was actually an inheritance. When you fill out your amended return , in the box at the bottom , you just explain the reason for the change in your tax return...let them know that you inherited the stocks after your GM died. But your uncle ,I guess the executor, never filed taxes for it and now im being charged 39,000+ from the IRS for not including the information on my tax returns know that!please contact the irs asap for more advice.
#2;As mentioned above; once you sold them in gain, The IRS classifies them as capital assets. So, when you sell a capital asset, including a stock, you realize a capital gain or loss. If you profit from the sale of a stock, you must report the transaction to the IRS, in most cases. The IRS requires you to pay taxes on all capital gains that you receive.if you did, the you need to report the gain on 1040X.