Definitely report it! I didn't report an inherited property sale a few years ago because it sold for less than the appraised value at death. Ended up getting a letter from the IRS asking about it, and had to go through the hassle of amending my return. Even though you don't owe any taxes, the title company reports the sale to the IRS on a 1099-S form, so they know about the transaction. Better to report it properly the first time than deal with questions later!

Just went through this exact situation with my grandmother's house last year! Even though we had no capital gains (actually a small loss), our tax preparer emphasized that we absolutely had to report it. The IRS gets a copy of the 1099-S from the title company showing the sale, so they'll be expecting to see it on your return. One tip that saved us some headaches - make sure you have clear documentation of the stepped-up basis. We used the estate's formal appraisal, but I've heard some people successfully use other methods like comparative market analysis if done close to the date of death. Since there are multiple siblings involved, each of you will report your portion of the sale on your individual tax returns. So if you inherited equal shares, you'd each report 1/3 of both the sale price and the stepped-up basis. Definitely smart to get professional help for this year - inherited property sales have some nuances that are worth getting right the first time!

Quick question - does anyone know if investment fund fees can be deducted from the capital loss in this situation? We paid about $450 in fees when selling these inherited mutual funds and I'm not sure if those can be factored into the loss calculation.

Just to add some clarity on the documentation side - when I dealt with inherited assets last year, the brokerage firm actually provided a special statement specifically for tax purposes that showed both the original cost basis and the stepped-up basis as of the date of death. If your wife's uncle's brokerage hasn't provided this yet, definitely call them and ask for an "inherited securities basis statement" or something similar. Most major firms like Fidelity, Vanguard, etc. have standard forms for this exact situation. Having that official documentation from the brokerage makes everything much cleaner for your tax filing and removes any guesswork about what the exact values were on the date of death. Also worth noting - if there were any dividends or distributions between the date of death and when you sold, those are taxable income to you as the beneficiary, separate from the capital loss calculation.

One thing to watch out for - with that large amount coming in, your mom is likely to be targeted by financial "advisors" who are really just insurance salespeople trying to sell her annuities or whole life policies. These products usually come with HUGE commissions for the salesperson and restrictions on accessing the money. They'll use scare tactics about taxes to push these products. Instead, look for a fee-only fiduciary financial advisor (they legally must act in her best interest). Check credentials - look for a CFP (Certified Financial Planner). Initial consultation should be free, and they should clearly explain how they're compensated.

I'm so sorry for the loss of your father. Managing a large inheritance while grieving is incredibly overwhelming. One critical point that hasn't been fully addressed - make sure the trust executor provides your mother with a Schedule K-1 showing her share of any trust income for the tax year. Even though the inheritance itself isn't taxable, if the trust generated income while the property was being sold, she may owe taxes on her portion of that income. Also, since your mom has been living on just $1,900/month in Social Security, this inheritance could dramatically change her tax situation going forward. The investment income from $1.5 million could easily push her into higher tax brackets and trigger additional Medicare premiums (IRMAA surcharges). I'd strongly recommend meeting with both a tax professional AND a fee-only financial advisor before the money arrives. Having a plan in place will prevent rushed decisions. Consider strategies like tax-loss harvesting, municipal bonds for tax-free income, and perhaps spreading some investments across tax-deferred accounts if she has earned income. Most importantly, don't let anyone pressure her into immediate decisions. Legitimate financial professionals will encourage taking time to make thoughtful choices.

One thing nobody's mentioned yet - make sure you check if your state has an inheritance tax! Federal step-up basis rules are great, but I got caught off guard last year because my state (Pennsylvania) has its own inheritance tax that applies regardless of whether you sell the assets or not. It's not just PA - Nebraska, Iowa, Kentucky, New Jersey, and Maryland also have inheritance taxes, and they all work differently. My brother lives in a different state than me and we had completely different tax situations even though we inherited identical assets. The step-up in basis for federal taxes is awesome, but don't get blindsided by state-level taxes like I did!

Make sure you get proper valuations for any hard-to-value assets in your inheritance! My dad left me some closely-held business interests and collectible coins that weren't publicly traded. The executor used a ballpark estimate for the business interests, but when I sold them 2 years later, the IRS questioned my basis and I had to pay for a retroactive professional valuation. For the coins, I had to hire a numismatic expert. For your stocks, if they're publicly traded, it's pretty straightforward - just the closing price on date of death (or alternate valuation date if the executor chose that). But for anything without a clear market value, document document document!

Has anyone used TurboTax to handle estimated taxes for capital gains? Their interface is confusing me and I can't figure out where to input the estimated payment I already made.

Just want to add that if your capital gains came from crypto, make sure you're tracking all your transactions properly. The IRS is really cracking down on crypto reporting. I learned this the hard way when I got a CP2000 notice questioning my crypto gains.