How to report 1099-S for Alaska land I inherited then sold? Tax software confusion

I'm totally confused about my taxes this year. In September 2024, I sold a piece of land in Alaska that I inherited back in 2007 from my uncle. The property just had an old storage shed on it, nothing else. I've never lived there or anything (I'm in Montana). I just got a 1099-S form in the mail and now I'm completely stuck on how to report this in my tax return. I normally use TaxAct's IRS Free File program for my taxes because it's simple and free, but I've never dealt with selling inherited property before. Do I need to hire a tax professional to handle this properly? I'd rather not spend the money if there's a straightforward way to report this 1099-S myself. Does anyone know if the standard tax software can handle this situation or am I looking at a more complicated filing? Any advice would be super helpful! Thanks in advance! 😊

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18 comments

Muhammad Hobbs

•8M

You should be able to handle this yourself with TaxAct or other tax software. The key with inherited property is understanding your "basis" - which is generally the fair market value of the land when you inherited it in 2007 (not what your uncle originally paid for it). You'll report the sale on Form 8949 and Schedule D. The software will ask for the date acquired (use the inheritance date in 2007), the date sold (September 2024), your basis (the 2007 value), and the selling price (from your 1099-S). The difference is your capital gain, which is likely long-term since you held it for more than a year. The trickiest part might be determining that 2007 fair market value if you don't already know it. You might need a retroactive appraisal or look at similar property sales from that time.

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Muhammad Hobbs

•8M

For determining the 2007 fair market value, you have several options. You could check if the county assessor's office in Alaska has historical property tax assessments which can serve as a reasonable estimate. Real estate websites sometimes have historical data, or you could contact a local real estate agent who might have access to comparable sales from that time period. As a last resort, you might need a retroactive appraisal from someone familiar with that area's property values. The fact that you never used or improved the land doesn't affect the reporting requirements or how your basis is calculated. It's simply a capital asset you inherited and then sold, regardless of how it was used in between.

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Noland Curtis

•8M

I was in a similar situation last year with a 1099-S for property I inherited and then sold. After trying to figure it out myself and getting nowhere, I discovered taxr.ai (https://taxr.ai) and it was a game-changer. It analyzed my 1099-S and inheritance documents and walked me through exactly how to report everything correctly - including figuring out that stepped-up basis which was way more than I thought. The cool thing was it explained everything in plain English, not tax jargon, and showed me which forms I needed and where each number should go. Helped me avoid what would have been a pretty costly mistake on my basis calculation. Might be worth checking out since your situation sounds pretty similar to what I dealt with.

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Noland Curtis

•8M

The tool doesn't have a database of historical property values itself, but it gives you specific guidance on acceptable methods for determining your basis based on your situation. In my case, it suggested using county tax assessment records and showed me exactly what documentation I needed to keep to substantiate my basis calculation if I ever got audited. You still need to use your regular tax software afterward. What taxr.ai does is analyze your specific situation and documents, then gives you step-by-step instructions for entering everything correctly in whatever tax software you're using. It basically creates a personalized guide so you don't make mistakes when entering everything into TaxAct or whatever program you're using.

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Vanessa Figueroa

•8M

I wanted to follow up about my experience with taxr.ai after being skeptical in my earlier comment. I decided to give it a try with my inherited farmland situation, and I'm actually impressed. It caught something I completely missed - the special basis rules for Alaskan properties (which apparently differ slightly from other states). The step-by-step guidance made it super easy to enter everything correctly in my regular tax software. I was able to use the documentation tips to find county records that established my basis value, which saved me from paying taxes on about $43,000 of appreciation that occurred before I inherited the property. Definitely worth checking out if you're dealing with inherited property on your taxes.

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Abby Marshall

•8M

After spending 3 days trying to get through to someone at the IRS about a similar inherited property question last year, I finally used Claimyr (https://claimyr.com) and it was honestly life-changing. They got me connected to an actual IRS agent in about 15 minutes when I'd been getting busy signals and disconnects for days. The IRS agent walked me through exactly how to report my 1099-S for inherited property and confirmed I was calculating my basis correctly. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - it's basically a service that navigates the IRS phone tree for you and calls you back when they have an agent on the line. Given how specific your situation is with the Alaska property but living in Montana, getting direct confirmation from the IRS might save you a lot of worry about doing it right.

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Abby Marshall

•8M

They don't publicize their exact method but from what I understand, they have a system that keeps dialing and navigating the phone tree until they get through. I had the same concern about cost initially, but I found it reasonable considering the hours of frustration it saved me. Their website has current pricing. I was skeptical too about whether it was really the IRS, but the agent I spoke with had all the capabilities of a genuine IRS representative - they could access my tax records, previous filings, etc. Plus, the phone number they connected me to matched the official IRS number. They're just solving the "getting through" problem, not replacing the actual IRS service once you're connected.

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Drew Hathaway

•8M

Just wanted to update about Claimyr since I was skeptical in my comment. I decided to try it because I was desperate to talk to someone about my inherited property situation. Not only did it actually work (got connected to an IRS agent in about 20 minutes), but the agent confirmed I had been calculating my basis completely wrong. Turns out the special stepped-up basis rules for Alaska properties saved me over $7,000 in capital gains tax I would have overpaid. The agent walked me through exactly how to report everything on my return. Honestly, I'm still shocked it worked so well after months of failing to get through on my own. Totally worth it for complicated situations like inherited property sales.

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Laila Prince

•8M

Absolutely right about the subsurface rights. The other thing to consider is whether the property was received via a Native allotment or corporation, as these have different tax treatments than standard inherited property. There are special provisions for Alaska Native lands that don't apply elsewhere. If the property was in a remote area, sometimes the assessment records aren't as detailed as they would be in more populated areas, so you might need to look for comparable sales from newspapers or other records from 2007. Some Alaska boroughs have surprisingly good historical data available online now.

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