? Inheritance Tax Question ?

[wvhillbilly]

Good morning Savers!

I tried Googling what I needed to know but of course the results all kind of say something different. So I thought I would turn to the group of smartest people I know!

Grand-father passed away at the beginning of the year; leaving me some Property and Life Insurance payout.

I sold the Property for $20,000.
Currently have that 20k and the Life Insurance $ sitting in my checking account.

I’m afraid to move it or do anything with it because I don’t begin to know what my tax obligations will be. I am a West Virginia resident.

Any info, insight, advice, etc would be so appreciated.

Thanks, have a wonderful day.

[disneysteve]

A quick search shows there is no inheritance tax in West Virginia.

Sorry for your loss.

[wvhillbilly]

“A quick search shows there is no inheritance tax in West Virginia.”

So I’m assuming I’m in the clear from sales tax or gains tax or whatever may be from the selling of the property?

that would be fantastic

[Like2Plan]

“A quick search shows there is no inheritance tax in West Virginia.”

So I’m assuming I’m in the clear from sales tax or gains tax or whatever may be from the selling of the property?

that would be fantastic

Here is a clip and a link to the IRS web site regarding figuring the cost basis for a property:
"To determine if the sale of inherited property is taxable, you must first determine your basis in the property. The basis of property inherited from a decedent is generally one of the following:

• The fair market value (FMV) of the property on the date of the decedent's death (whether or not the executor of the estate files an estate tax return (Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return)).
• The FMV of the property on the alternate valuation date, but only if the executor of the estate files an estate tax return (Form 706) and elects to use the alternate valuation on that return. See the Instructions for Form 706.

For information on the FMV of inherited property on the date of the decedent’s death, contact the executor of the decedent’s estate. Also, note that in 2015, Congress passed a new law that, in certain circumstances, requires the recipient’s basis in certain inherited property to be consistent with the value of the property as finally determined for Federal estate tax purposes. Check What's New - Estate and Gift Tax for updates on final rules being promulgated to implement the new law."

https://www.irs.gov/faqs/interest-dividends-other-types-of-income/gifts-inheritances/gifts-inheritances

Here is another link from investopedia:

https://www.investopedia.com/ask/answers/073115/how-cost-basis-calculated-inherited-asset.asp

[disneysteve]

So I’m assuming I’m in the clear from sales tax or gains tax or whatever may be from the selling of the property?

I'm not sure if there is sales tax but if there is that should have been handled at the time of the sale so check all of the settlement paperwork or ask the realtor who handled the sale.

As for gains, you could owe tax on the difference between what the house sold for and what it was worth at the time you inherited it. Since both the inheritance and the sale occurred earlier this year and the sale was only for $20,000, I can't imagine the value had changed much during the time you owned it so there was probably very little if any gain to be taxed.

I inherited a house in May and sold it in August. I got a professional statement of value done in June, I think, to establish my basis and the house sold for right around that number so there was no gain to speak of and thus no tax to be paid.

[myrdale]

This is a nice little read from Dave Ramsey:

https://www.ramseysolutions.com/insurance/is-life-insurance-taxable

I had started to write additional response below, but it was a whole lot of "I don't know" so I'll just stick with that!