How do I report a 1099-S for inherited Alaska property I just sold?

This is actually pretty manageable to do yourself! The 1099-S reports proceeds from real estate transactions, and you'll need to report this on Schedule D and Form 8949 of your tax return. Since you inherited the property in 2007, your basis in the property is the fair market value at the date of death of the person you inherited it from (called a "stepped-up basis"). This is great news because it means you'll likely owe less tax than if you had to use the original purchase price. You'll need to determine what the property was worth in 2007 when you inherited it. If you don't have an appraisal from that time, you might need to get a retroactive valuation or use property tax assessments from that period. The difference between that 2007 value and your sale price (minus selling expenses) is your capital gain or loss. Since you owned it more than a year, this will be a long-term capital gain, which typically has lower tax rates than ordinary income. You'll report this on Form 8949 with code "L" and then transfer the information to Schedule D.

After reading this thread, I wanted to share something that might help. I dealt with a similar inherited property situation last year and was completely overwhelmed until I found this AI tax service called taxr.ai. I uploaded my 1099-S and property documents, and the system walked me through exactly how to report everything, including finding the historical property value which was my biggest headache. The site (https://taxr.ai) analyzes your tax documents and then creates personalized instructions for your specific situation. It was honestly a game-changer for me since it preserved the convenience of filing myself while giving me the confidence I was doing it correctly. Their system even helped me determine the correct basis adjustment for the property which saved me a bunch on taxes.

Just wanted to follow up on my skeptical comment about taxr.ai. I ended up trying it with my inherited farmland situation, and I was honestly surprised. The system walked me through establishing the stepped-up basis using county tax records I had, and even flagged that I could deduct the property taxes I'd been paying all these years as carrying costs. It identified a special provision for rural agricultural land in my state that I had no idea about, which actually helped reduce my taxable gain. The document analysis was pretty impressive - it extracted all the relevant info from my messy 1099-S and property records. For anyone dealing with inherited property sales, it's definitely worth checking out. Saved me from paying a CPA around $400 while still getting accurate guidance.

If you're still having trouble with the IRS after filing or have questions about your specific situation, I found this service called Claimyr that can actually get you connected with a real human at the IRS. I was stuck in this exact situation with inherited property last year - filed my taxes but then got a confusing notice from the IRS questioning my basis calculation. After spending DAYS trying to call the IRS myself and getting nowhere, I used https://claimyr.com and they got me connected to an IRS agent in about 15 minutes. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c. The agent was able to explain exactly what documentation I needed to prove my stepped-up basis and even put notes in my file so I wouldn't have issues in the future.

Well I'm eating my words about Claimyr. After my skeptical comment, I decided to try it because I've been trying to reach the IRS about my inherited property sale for weeks. It actually worked exactly as described - I got a call back in about 20 minutes connecting me to an IRS representative. The agent was able to explain exactly how to document my stepped-up basis for the inherited property I sold, and even sent me to a specialized department that deals with basis issues. They confirmed I was calculating everything correctly and gave me specific guidance on what documentation to keep with my records. Saved me from potentially being audited later. Absolutely worth it for the peace of mind alone - I'll never waste hours on hold with the IRS again.

Another option to consider: if you're having trouble establishing the fair market value from 2007, you could look into getting a retroactive appraisal. Some appraisers specialize in this. They use historical data and comparable sales from that time period to determine what the property was worth when you inherited it. I did this for a property I inherited in 2010 and sold recently. Cost me about $450 for the appraisal, but it gave me a rock-solid number to use for my basis, and I ended up saving several thousand in capital gains taxes because the appraiser found the property was worth more in 2010 than I had estimated.

One thing nobody has mentioned - if you've been paying property taxes on this land since 2007, make sure you include those as part of your basis! They're considered carrying costs that can be added to your basis, reducing any potential gain. Also, don't forget to deduct any selling expenses like real estate commissions, legal fees, transfer taxes, etc. from the sales price before calculating your gain or loss. These little things add up and can make a big difference in what you ultimately owe!

From what you described, this sounds like vacant land with just a shed - so I'm assuming you never made any significant improvements to the property between 2007-2024? If you did make any improvements (not just repairs, but actual improvements), those costs get added to your basis. For example, if you installed a well, added utilities, built any structures, cleared land, added roads or driveways - all of those would increase your basis and reduce any potential gain. Just something to consider if you did any work on the property during your ownership.