Reporting tax gain of jointly-owned condo

[curiousgeorge]

A friend has situation similar to m2m thread.

Just curious:  If sale made by both A & B as sellers, then a 1099S was reported for each.
Half of cap gain is reported by A as income but reduced a lot by cost basis, resulting in lower taxable gain.  With zero cost basis, B's taxable gain is 100% of the cap gain she received.  Looks like A 'manipulated' it just to lower her tax? Not a red flag for A?

Thanks. 

[mwcpa]

Is A reporting the correct and documented cost basis? If yes, what is to fear? If no, then fear is warranted.

Fear of IRS scrutiny if you have the documented evidence is a foolish fear.... should A over pay tax just to avoid a red flag and give that savings to B who got a financial benefit with no risk.....

Report the correct transactions and do not worry about the IRS.... if you have the proof any questions can be answered, yes, you may need to go and meet with the IRS, but what is to fear.... you have the proof....

[curiousgeorge]

Thanks so much!


"Fear of IRS scrutiny if you have the documented evidence is a foolish fear"

Unfortunately, IRS scrutiny albeit foolish, is a very real fear for both A&B.

"Report the correct transactions and do not worry about the IRS...."

So:  Separate 1099-S for A & B reports half of proceeds
A's tax return reports half of proceeds minus correct cost basis = less taxable gain
B's tax return reports half of proceeds minus zero cost basis = B's 'share' of proceeds, 100% taxable
    
Does the zero cost basis on B's return need a comment or something to explain why zero?
(Note: B has not filed a tax return for past 2 years because income was below filing requirement.)

By the way, what form/schedule is a 1099S reported?  Just curious.

[mwcpa]

In your example, if b has no cost basis that it correct.  If a has paid for all of the cost that is correct.  Doing otherwise is incorrect.

the 1099 gets reported on the schedule d series.

[curiousgeorge]

Thanks so much MW!

My friends and I owe you a million thanks! 
Ever since I found you at the msn site, I have become the go-to person for friends with tax questions - my friends think that I can better present to you their questions than they can.