Estimated NY & federal taxes on condo sale capital gains

[m2m]

Good morning,

Recently sold a NYC condo.  Seller's lawyer submitted NYS IT 2664 without asking seller for cost basis.  On the NYS IT 2664, he put in as cost basis the very low purchase price from 15 years ago plus a guesstimated 10% improvements. (Lawyer knew the purchase because he was also the lawyer when seller purchased condo. )

Need to submit federal estimated tax - putting in the actual cost basis which is more than twice the cost basis that was on the NYS IT 2664.  Will this cause a problem?

Thanks.

[mwcpa]

"Will this cause a problem?"

No

You are making an "estimated" tax payment, not an actual one.

The IT-2664 is an estimated tax form, not an actual tax return.  Your IT-203 (filed in 2015) is where you will report the proper information related to cost basis.

[m2m]

Thanks sooo much MW!

That's a relief!! Someone said to be prepared for an audit saying federal may not trigger an
audit but NY will most likely audit because IT-203 in 2015 will have at least 50% refund from the tax paid on IT-2664. (IT-2664 capital gain based on half of the true cost basis.)

[mwcpa]

While New York does review large refund claims, overpaying an estimate should not increase the risk of audit.

that being said, be sure to maintain the documents that support the adjusted basis in the property for up to three years or April 15, 2018, which ever is later, after you file your 2014 tax return. 

[m2m]

Good morning MW and thanks again.
You're the best!!