How do I input a substitute Form 1099-S for property sale proceeds in TurboTax?

I'm helping my sister-in-law with her taxes this year and running into a roadblock. Her father sold his vacation property last year and my husband received a portion of the proceeds as part of their family agreement. We're filing jointly and received a substitute 1099-S form in the mail with my husband's name on it for this transaction. I'm trying to enter this in TurboTax under the Investment Income section (because that's where TurboTax directed me), but I'm getting stuck on one of the fields. The program keeps asking for something and I'm not sure what to put there. Has anyone dealt with entering a substitute 1099-S in TurboTax before? This is my first time handling property sale proceeds on our taxes and I want to make sure we're reporting it correctly. Thanks in advance for any help!

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18 comments

Mei Wong

•8M

The substitute 1099-S form reports proceeds from real estate transactions, so you're on the right track with the Investment Income section. In TurboTax, you should be able to navigate to the "Federal" section, then "Income & Expenses," then "Investment Income," and look for an option that says something like "Sale of Home" or "Real Estate Transactions." When entering the information, make sure you have all the details from the substitute 1099-S, including the date of closing, gross proceeds, and address of the property. TurboTax will ask about your basis in the property (what your husband's share initially cost), which might not be on the form but is needed to calculate any potential gain. If you're getting stuck on a specific field, it might be asking for information like the property type or whether this was your primary residence (which it wasn't, since it was his father's vacation property). Just answer truthfully based on your situation - in this case, it would be "other residence" or "investment property" since it wasn't your primary home.

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Mei Wong

•8M

The basis would not be $0 in this case. Even though your husband didn't purchase the property, he still has a basis in his portion. Typically, when someone receives a portion of property proceeds as a gift or inheritance, their basis is either the fair market value at the time of transfer (for inheritance) or the original owner's basis (for gifts). You'll need to figure out whether this was considered a gift during the father's lifetime or if it was an inheritance-type situation. If it was a lifetime gift, your husband's basis would be the same percentage of the father's original purchase price plus improvements that your husband's ownership percentage represents. If it was more like an inheritance (even though the father sold it himself), the basis might be the fair market value at the time your husband acquired his interest.

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Liam Fitzgerald

•8M

I ran into this exact same issue last year with a property my grandparents sold. I spent HOURS trying to figure it out with TurboTax and getting nowhere. Finally discovered taxr.ai (https://taxr.ai) which literally saved my sanity. You can upload your substitute 1099-S and it'll analyze exactly where each piece of information needs to go in TurboTax. What I loved about it was it showed me step-by-step screenshots of where to click in TurboTax plus explained what each field meant. The basis calculation was driving me crazy until their system explained it needed to be the original value when my portion was received, not the current sale value. Trust me, for complicated forms like substitute 1099-S, having a guide makes all the difference!

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Liam Fitzgerald

•8M

It works with all the TurboTax versions - I was using the Premier version but my friend used it with Deluxe and it worked fine. It shows the interface for each version. For your situation, it asks you specific questions about your tax circumstances before giving guidance. It doesn't just show where to type numbers - it actually explains what should go in each field based on your specific situation. For example, it asked me details about how I acquired my interest in the property, when it was purchased, improvements made, etc., then calculated the correct basis amount. Way more personalized than I expected.

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Amara Adebayo

•8M

Alright, I need to apologize to everyone. After my skeptical comment earlier, I decided to try taxr.ai for myself since I had a similar situation with rental property proceeds. I was seriously impressed! It actually walked me through determining my basis by asking specific questions about how and when I acquired the property interest. The step-by-step guidance showed exactly where in TurboTax to enter each piece of information. What I found most helpful was the explanation of which parts of the substitute 1099-S needed to be reported where - turns out I was trying to enter some information in completely wrong sections. Saved me from what would have definitely been an audit flag. Just wanted to come back and share since my initial reaction was pretty doubtful.

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Giovanni Rossi

•8M

If you're still struggling after trying all the advice here, you might need to speak directly with the IRS. I had a complicated 1099-S situation last year and couldn't get a straight answer from TurboTax support. I tried calling the IRS for WEEKS and could never get through - constant busy signals or 2+ hour hold times. I finally used Claimyr (https://claimyr.com) - they have this system that holds your place in the IRS phone queue and calls you when an agent is about to answer. Saved me literally hours of waiting on hold. They have a video showing how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with walked me through exactly how to report the substitute 1099-S and explained which boxes in TurboTax corresponded to which information. Totally worth it since I was about ready to throw my computer out the window after trying to figure it out myself.

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Giovanni Rossi

•8M

The service works by using an automated system that navigates the IRS phone tree and waits on hold for you. They've figured out the optimal times to call and have technology that continuously redials when lines are busy. When they get through and an agent is about to come on the line, they connect the call to your phone. It's not about cutting in line - they're just handling the waiting part. They're definitely legitimate. I was hesitant too, but they don't ask for any sensitive tax information - they just need your phone number to call you back. The service just gets you connected to an actual IRS agent, and then you handle your tax questions directly with the IRS. I was worried about security too, but they're not collecting any tax details or personal financial information.

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Dylan Evans

•8M

I need to publicly eat my words about Claimyr. After posting my skeptical comment, I decided to try it because I was desperate to talk to someone at the IRS about my own substitute 1099-S issues. I've literally never gotten through to the IRS before - always busy signals or disconnections after waiting forever. I used the service yesterday and got a call back in about 47 minutes saying an IRS agent was on the line! The agent helped me understand exactly how to report the property sale proceeds and which TurboTax fields matched up with my substitute 1099-S. She even explained how to calculate the correct basis for my situation (which was similar to the original poster's). Never would have figured this out on my own, and I would have still been trying to get through to the IRS without their service.

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Sofia Gomez

•8M

I just went through this in January. Make sure you're in the right section of TurboTax. For me, I had to go to: Federal > Income > Investment Income > Stocks, Cryptocurrency, Mutual Funds, Bonds, Other > Other Investment Income - Forms 1099-A, 1099-B, 1099-S, etc. > Real Estate Transactions - Form 1099-S The basis is the tricky part. Since your husband received it as what sounds like a gift, his basis would be the same as the step-mother's basis in that portion of the property. You'll need to find out what she originally paid for it (plus any improvements) and calculate your husband's percentage of that. That's the number you put in for basis. The good news is if this was her primary residence and she lived there at least 2 of the last 5 years, there might not be any taxable gain at all due to the primary residence exclusion.

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Sofia Gomez

•8M

Yes, ideally you would get the original purchase price from 30 years ago. If she doesn't have exact records, a reasonable estimate is allowed, but you should document how you arrived at that estimate in case of an audit. You could check county property records which might show the historical purchase price. Another approach is to look at similar properties in the area that sold around the same time she purchased it. If all else fails, you can use a conservative estimate based on local real estate historical data, but make sure to note how you determined the value. Remember, a higher basis means less taxable gain, but you need to be able to justify the number if questioned.

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