Do I owe taxes on the profit I made from selling inherited property?
My mother passed away in March 2018. She left me land with right to survivorship. I never planned to move on the property, so the neighbor purchased it from me. My mother paid $50,000 for the property 40 years ago. I received $150,000 for the property. Two CPAs said no tax due because it is inherited. I believe federal and state tax is due on the gain. Do I owe taxes? Do I need to use Form 8949?
As far as federal taxes go, if your mother was the sole owner of the property her cost basis (the $50,000) would be "stepped-up" to the fair market value of the property on her date-of-death. Assuming you had an appraisal on the property and the date-of-death value was $150,000, this would be your new basis in the land, and you would have no gain to pay taxes on.
However, you mention that you received the property with right of surviroship. It is unclear whether or not you owned the property jointly or not. If the property was held as joint with rights of survivorship, only half the basis would be stepped up. Therefore, your half of the property would have a basis of $25,000 (half of the original $50,000 basis) and your mother's half of the property would be stepped-up to her DOD value, $75,000 (half of the $150,000.) In this case the total basis would be $100,000 and there would be a $50,000 gain you would need to pay tax on.
Did you have the property appraised for probate and tax filings when your mother died? Because if you did and the value on date of your mother's death was $150,000, and you sell it for $150,000 you would have no gain or loss. The basis your mother had in the house died when your mother died, and the estate receives what tax law calls a "step up in Basis" to the Fair Market Value on the date of her death.
If your mother transfered the house to you WHILE SHE WAS STILL ALIVE, then you have a problem. The basis your mother had when she was alive was only $50,000 and thus this would be your basis if she gave this property to you while she was alive. There is no exception to this.
So, did your mother transfer the house to you while she was alive? Or did you receive it through her estate?