Has anyone dealt with a situation where the house significantly appreciated between death and sale? My situation is similar but we didn't sell right away and now there's a huge gain from the stepped-up basis to sale price.

I'm dealing with a very similar situation right now with my grandmother's estate. One additional thing to consider that hasn't been mentioned yet - if the property was used as a rental before your aunt passed, you may also need to deal with depreciation recapture on Schedule D. This gets reported as ordinary income rather than capital gains and can significantly impact the tax liability. Also, make sure you get a proper appraisal of the property as of the date of death to establish the stepped-up basis. The IRS may question the valuation later, especially with a $425,000 property, so having professional documentation is crucial. I learned this the hard way when they asked for supporting documentation during my grandmother's estate audit. For the K-1 distributions to 20 beneficiaries, consider whether any of them are minors or have special circumstances that might affect how they report their share of the gain. This can get complex quickly with that many people involved.

As someone who works in tax preparation, I see this exact scenario probably 50+ times every tax season! You're absolutely on the right track thinking you can still claim him as a dependent for this final year. The key factors working in your favor: 1) He was a full-time student for 5+ months (January through May graduation), 2) He lived with you for more than half the year, and 3) You provided more than half his total support for the entire 12-month period. That $38,000 income actually doesn't matter at all for qualifying child dependents under age 24 - there's no income limit like there is for qualifying relatives. The IRS cares about support, not earnings. Just make sure when he files his own return (which he'll need to do since he earned over the filing threshold), he checks the box indicating he can be claimed as a dependent on someone else's return. This prevents any conflicts with the IRS systems. One last tip: if you paid any education expenses for his final semester, you might be eligible for education credits that could be worth more than the dependency exemption itself. Worth looking into!

I went through this exact same situation last year with my youngest daughter! She graduated in May and started her first "real job" in August making about $35,000 for those few months. I was so stressed about whether we could still claim her. After doing a ton of research and even calling a tax professional, I learned that the timing of graduation and job start actually works in your favor. Since your son was a full-time student for the first 5 months of the year, he still qualifies as a "qualifying child" under the IRS rules, regardless of his income. The support test is really what matters most. In our case, even though my daughter had income, we calculated that between rent (she lived at home), food, car insurance, health insurance, phone bill, and other expenses we covered, we definitely provided more than 50% of her total support for the year. One thing that helped me feel more confident was keeping a simple spreadsheet tracking major expenses we paid for her throughout the year - made it easy to show we met the support requirement if needed. The peace of mind was worth the extra record-keeping! Your son will need to file his own return and check the box saying someone else can claim him as a dependent, but you should be all set to claim him one final time. Good luck!

This whole thread has been incredibly helpful! I had the exact same confusion with my E*Trade 1099-B and was leaning toward answer (b) before reading everyone's explanations. What really clicked for me was understanding that E*Trade is essentially doing the math for you behind the scenes. When they show that $839,230 cost basis, they've already factored in all the wash sale adjustments that happened throughout the year. So that $89,700 "Wash Sale Loss Disallowed" figure represents adjustments that are already reflected in your cost basis - it's not something you need to add separately. I think the confusion comes from the fact that this column exists at all. It feels like it should be part of the calculation somehow, but really it's just there for transparency so you can see how much in losses were disallowed during the tax year. Thanks to everyone who shared their experiences with E*Trade support, the IRS, and tax professionals. It's reassuring to see the same answer confirmed through multiple sources. I'm definitely going with the $37,220 realized gain amount when I file!

This has been such a valuable thread! I'm dealing with the exact same E*Trade 1099-B situation and was completely lost until reading everyone's explanations. What really helped me understand this was the analogy about the receipt - the "Wash Sale Loss Disallowed" column is like documentation showing what adjustments were made, but those adjustments are already incorporated into the cost basis figure. E*Trade has done all the heavy lifting by automatically adjusting the cost basis upward to account for disallowed wash sale losses. I was initially leaning toward answer (b) and adding the $89,700 to the realized gain, but now I clearly see that would be double-counting. The $37,220 realized gain is already the correct taxable amount because it's calculated using the wash-sale-adjusted cost basis. Thanks to everyone who called E*Trade support, used the IRS callback services, and shared their experiences with tax professionals. Having multiple independent confirmations of the same answer gives me confidence to file correctly. This community really came through with practical, actionable advice!

The name change issue is definitely a major red flag here! I went through something similar after getting married - filed with my new name but SSA hadn't fully updated their records yet, which caused a 3+ month delay. The IRS basically puts your return on hold until they can verify your identity matches what's in the Social Security database. Here's what I'd recommend doing ASAP: 1) Call SSA at 1-800-772-1213 to verify your name change is properly recorded 2) Check both your return transcript AND account transcript - sometimes one updates before the other 3) Look for any mail from the IRS (sometimes verification letters get lost or look like junk mail) The "response date" is just their internal deadline but honestly means nothing - they're so backlogged they rarely meet their own deadlines anyway. A blank transcript after 6+ weeks with a recent name change almost always means identity verification issues. The good news is once they sort out the name mismatch, everything usually processes really quickly. I got my refund 4 days after they finally resolved my case. It's incredibly frustrating but hang in there - you're not alone in this mess!

I'm dealing with the exact same frustrating situation! Filed on March 8th, accepted immediately, but my transcript has been completely blank for over 7 weeks now. The "Where's My Refund" tool just keeps showing that generic "still being processed" message with no actual timeline or explanation. From everything I've researched (and I've been obsessively googling this), the "response date" is basically just an internal IRS deadline that they set for themselves - but honestly, they're so backlogged this year that those dates don't mean much. A blank transcript after this long usually indicates either your return is stuck in their massive processing queue OR something flagged it for additional review. The name change after marriage that you mentioned is probably the main culprit here! I've seen this issue come up repeatedly in forums - even after updating your name with Social Security, there can be significant delays before their database properly syncs with the IRS system. This mismatch can hold up processing for months while they try to verify your identity. I'd definitely recommend calling SSA tomorrow to confirm your name change is fully processed and showing up correctly in their records. Also make sure you're checking both your return transcript AND your account transcript - sometimes updates appear in one before the other. The waiting is absolutely brutal when you're depending on that refund money for unexpected expenses. But based on what others have shared, once the name issue gets resolved, refunds typically process very quickly. Stay strong - we'll get through this mess eventually! 🤞

This is exactly the kind of situation where maximizing your pre-tax retirement contributions can really pay off! As a fellow educator (I teach high school biology), I've been through this same calculation. One thing to consider is the timing of your contributions. If you're paid over 10 months like many teachers, you might want to front-load your 403b contributions earlier in the year to get a better sense of where your MAGI will land. This gives you more flexibility to adjust if needed. Also, don't forget about HSA contributions if either of your school districts offers high-deductible health plans with HSAs. Those contributions also reduce MAGI and you can use HSA funds for qualified medical expenses tax-free forever. With two college students, you might have some medical expenses that could benefit from this strategy. The key is running the numbers to see exactly how much you need to contribute to stay under that $160k threshold. Every dollar of education credits you preserve is worth way more than the tax deferral benefit of the retirement contribution alone!

As a California educator myself (elementary school principal), I can confirm that 403b contributions absolutely reduce your MAGI for education credit purposes. This saved my family thousands when my daughter was in college. One strategy that worked well for us was to calculate our projected MAGI early in the tax year, then adjust our 403b contributions accordingly. Since we're paid over 10 months, I increased my contribution percentage mid-year when I realized we were close to the phase-out threshold. Also worth noting - if you're over 50, don't forget about catch-up contributions! The additional $7,500 you can contribute to your 403b in 2025 can make a real difference in staying under that $160k MAGI limit for married filing jointly. With $24,000 in qualified expenses for two students, you're potentially looking at $5,000 in American Opportunity Credits if you can keep your MAGI in the right range. That's definitely worth optimizing your retirement contributions for!