Does Estate Pay Tax on Sale of Home? (w/Examples) + FAQs

Yes, an estate can owe tax when it sells a home, mainly capital gains tax on any rise in value above the home's stepped-up basis. Federal estate tax is a separate tax that reaches only a tiny fraction of estates, because the exemption is $15 million per person for 2026 deaths and $15.48 million for 2027 deaths.

Estate Home Sale Taxes: The Federal Overview

When an estate sells a home, two separate federal tax systems can apply: income tax on any capital gain from the sale, and estate tax on the total value of the estate. An estate might owe one, both or neither, and state taxes can add a third layer on top.

Capital Gains on an Inherited Home (Stepped-Up Basis)

Capital gains tax is the most common tax an estate pays when it sells real estate. Inherited property gets a stepped-up basis: the home's tax basis resets to its fair market value on the date of death.

Example: a parent bought a home for $100,000, and it is worth $400,000 at death. The estate's basis is $400,000. If it sells for $410,000 soon after, the gain is only $10,000, not $310,000. If it holds the home and sells later for $500,000, the $100,000 gain is taxed.

Most estates use the date-of-death value. The alternate valuation date, 6 months after death, is open only when the estate files Form 706 and the election lowers both the gross estate and the estate tax.

Inherited property always counts as held more than one year. For 2026, an estate's long-term gain is taxed at 0% up to $3,300, 15% up to the next breakpoint and 20% above that, under Rev. Proc. 2025-32. For 2027 the breakpoints are $3,400 and $16,750 under Rev. Proc. 2026-35. The 3.8% Net Investment Income Tax (NIIT) also applies to an estate's undistributed investment income above $16,000 for 2026 and $16,500 for 2027.

If the estate sells, it reports the gain to the Internal Revenue Service (IRS) on Form 1041 and pays from estate funds. If the executor distributes the home first, each heir uses the stepped-up basis and reports any gain on their own return.

A sale below the stepped-up basis creates a capital loss that offsets other estate gains, and unused losses pass to heirs in the estate's final year. The loss counts only if no beneficiary lived in or used the home while the estate held it.

Federal Estate Tax: Does Uncle Sam Tax the Home's Value?

Very large estates also face the federal estate tax, a tax on the total value of everything owned at death, including the home. It is separate from any capital gain on a sale.

High exemption: the basic exclusion amount is $15,000,000 for 2026 deaths and $15,480,000 for 2027 deaths, with a top rate of 40%. A married couple can shield $30 million (2026) with portability.
Example: a $17 million estate of someone who dies in 2026 has about $2 million taxable, so up to about $800,000 in tax.
Estate tax vs. home sale: the tax is due whether or not assets are sold, based on value at death. Selling the home does not create or avoid it; it only raises cash.
Deadline: the estate tax return (Form 706) is due 9 months after death, with a 6-month extension on Form 4768.
Step-up helps here too: without it, heirs of a large estate would pay estate tax on the value and income tax on the lifetime gain. The step-up removes the second tax.
Portability: a husband dies in 2026 leaving everything to his wife. His executor files Form 706 to elect portability, and his unused exclusion amount passes to her.
That unused amount stays fixed at the figure set at his death. Her own exclusion grows with inflation, so if she dies in 2027 she can shield his fixed amount plus her own indexed exclusion.
A missed election can often be filed late, up to 5 years after death, under Rev. Proc. 2022-32.
The sunset is gone: the One Big Beautiful Bill Act (Public Law 119-21) made the higher exemption permanent and indexes it for inflation from 2027. Congress can still change it, but no automatic cut is scheduled.

Federal Estate Tax Exemption by Year

Exemption by year of death: 2026 and 2027 are current, and 2024 and 2025 are shown as history.

Year of death	Exemption per person	Top rate	Status
2024 (history)	$13,610,000	40%	Past year
2025 (history)	$13,990,000	40%	Past year
2026	$15,000,000	40%	Set by Public Law 119-21
2027	$15,480,000	40%	Rev. Proc. 2026-35

The exemption is now permanent and adjusts for inflation each year, so the cut once predicted for 2026 never happened.

No "Home Sale Exclusion" for Estates (The Section 121 Issue)

For 2026 sales, homeowners can usually exclude $250,000 of gain ($500,000 for a married couple filing jointly) under Section 121 if they owned and lived in the home for 2 of the 5 years before the sale. Estates do not get this break, because the tests are personal to the taxpayer.

Why estates do not qualify: an estate cannot live in a house, so it cannot meet the use test. Any post-death gain it realizes is fully taxable.
Trusts after death: a revocable living trust stops being a grantor trust at death, so it cannot use the decedent's years in the home. The one old exception covered only 2010 deaths.

Heirs can earn their own exclusion under the 2026 rules. A daughter who inherits the house and moves in starts her own 2-year clock. She cannot count her parents' ownership or use. After 2 years as her main home, she can claim the single-filer exclusion on her own gain.

A surviving spouse has a special rule for 2026 sales. A widow or widower keeps the full joint exclusion if the sale closes within 2 years of the death, the survivor has not remarried, and the couple met the tests just before the death. After that window the limit drops to the single-filer amount. Our guide on whether seniors pay capital gains covers the same tests for living owners.

Example for 2026: a single parent's home has $300,000 of appreciation. Sold while alive, all but $50,000 of that gain is excluded. If the estate sells instead, the step-up wipes out the pre-death gain, but later growth is taxed with no exclusion.

Estate as a Taxpayer: Income Tax Returns and Rates

An estate that earns income, including a gain from selling a home, files a fiduciary income tax return, Form 1041. For 2026, the estate gets a $600 exemption.

Form 1041 reporting: the estate reports the sale proceeds, subtracts the stepped-up basis and selling costs such as commissions, and arrives at a capital gain or loss. The gain is taxed to the estate unless it passes out to heirs.
Other deductions: property taxes and other deductible costs paid up to the sale date reduce the estate's income too.
Distributions and K-1s: under Treasury Regulation 1.643(a)-3, capital gains stay with the estate unless the will or local law treats them as income, they are actually or consistently distributed, or it is the estate's final year.
Final-year planning: selling the house and closing the estate in the same tax year usually lets the gain flow to the heirs on their Schedule K-1s.
Tax rates: estates reach the top brackets at very low income (see the bracket table below). Spreading a gain across several heirs can keep most of it in a lower bracket.
Deducting expenses: selling costs reduce the gain. Administration expenses such as appraisal and legal fees can be deducted on Form 706 or Form 1041, but not both (Section 642(g)).

2026 and 2027 Estate and Trust Tax Brackets vs. a Single Heir

Item	2026 estate or trust	2027 estate or trust	Single individual
10% ordinary bracket ends	$3,300	$3,400	$12,400 (2026) / $12,800 (2027)
24% ordinary bracket ends	$11,700	$12,100	Higher thresholds apply
35% ordinary bracket ends	$16,000	$16,500	$640,600 (2026) / $661,375 (2027)
0% capital gains rate ends	$3,300	$3,400	$49,450 (2026)
15% capital gains rate ends	$16,250	$16,750	$545,500 (2026) / $563,200 (2027)
3.8% NIIT starts	$16,000	$16,500	$200,000 MAGI (not indexed)

The 2026 figures, including the single-filer column, come from Rev. Proc. 2025-32. The 2027 figures, including the single-filer column, come from Rev. Proc. 2026-35.

Worked example for 2026: an estate keeps a $100,000 gain. Using the brackets above, it owes about $18,700 in capital gains tax plus about $3,190 of NIIT, roughly $21,900 federal. Now suppose the same gain passes out to two heirs who each stay in the middle capital gains bracket. Each pays about $7,500, or $15,000 combined. Neither owes NIIT if their modified adjusted gross income (MAGI) stays under $200,000.

Trusts, Joint Ownership, and Other Special Situations

How the home was owned shapes the tax result. These rules apply to 2026 deaths and sales.

Revocable living trusts: the home still steps up at death. A Section 645 election on Form 8855 treats the trust as part of the estate for income tax.
Community property: in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin, both halves step up when one spouse dies.
Opt-in trusts: Alaska, Tennessee, South Dakota, Kentucky and Florida allow community-property trusts.
Non-spouse joint tenants: under Section 2040(a), the full value steps up, except any share the survivor paid for. Adding a child who paid nothing may have been a taxable gift.
Life estates and transfer-on-death deeds: both keep the home in the taxable estate, so the basis resets at death.
Qualified Personal Residence Trust (QPRT): it removes a home from the estate, but under Rev. Rul. 2023-2 the home gets no step-up.
1031 exchanges: since 2018 only real property qualifies. Heirs who rent out an inherited house can defer the gain by exchanging into other real estate.

In common-law states, only the decedent's half steps up. A New York couple bought for $200,000, and the home is worth half a million dollars when one spouse dies in 2026. The deceased's half steps up to half of that value, and the survivor's half stays at its original cost. The survivor's new basis is $350,000, so a sale at the date-of-death value leaves a $150,000 gain.

Executor's Role and Responsibilities

The executor (or personal representative) runs the sale and answers for the taxes. The main duties:

Set up the estate: get an employer identification number (EIN) and file Form 56 to tell the IRS you are the fiduciary.
Valuation: get a date-of-death appraisal. It sets the stepped-up basis and any Form 706 value. Undervaluing raises a later gain; overvaluing can raise estate tax.
Basis consistency: if Form 706 is required, file Form 8971 on time (see below).
Heirs' tax situations: with professional advice and the heirs' agreement, the executor can sometimes allocate more of the gain to an heir in a lower bracket.

Selling inside the estate turns the home into cash and lets the estate pay any tax on the gain before the heirs are paid. Distributing the home in kind triggers no tax. The heirs then decide whether to sell, buy each other out or move in.

Pay taxes and debts before distributing. Form 1041 is due on the 15th day of the 4th month after the estate's tax year ends (April 15 for a calendar-year estate), with a 5½-month extension on Form 7004. Under 31 U.S.C. §3713, an executor who pays heirs before the IRS can be personally liable. Before distributing, the executor can ask for a prompt assessment on Form 4810 and a discharge from personal liability on Form 5495.

The closing agent reports the sale on Form 1099-S under the estate's EIN, and the Form 1041 must match it. Issue Schedule K-1s for any income passed to heirs, and keep every receipt for repairs and upkeep along with closing costs.

Basis Consistency: Form 8971 and the Home's Reported Value

For a 2026 death, when an estate is large enough that Form 706 is required, the executor must file Form 8971 with the IRS and give each beneficiary a Schedule A within 30 days of filing Form 706. Under Section 1014(f), the basis in the home cannot exceed the value finally settled for estate tax. If a later sale reports a higher basis, the IRS can add an accuracy penalty under Section 6662(b)(8). This rule does not apply to estates that file Form 706 only to elect portability.

State-by-State Nuances: Beyond Federal Rules

Federal law sets the baseline: the step-up, the capital gains rules and the federal exemption. State laws add another layer of tax when an estate sells a home, and they vary widely.

State Estate Taxes ("Death Taxes" at the State Level)

Twelve states plus the District of Columbia impose their own estate tax, with exemptions far below the federal one. The 2026 thresholds, each linked to the agency that runs the tax:

Connecticut: $15,000,000 (flat 12%).
Hawaii: $5,490,000.
Illinois: $4,000,000, run by the Illinois Attorney General.
Maine: $7,160,000.
Maryland: $5,000,000.
Massachusetts: $2,000,000.
Minnesota: $3,000,000.
New York: $7,350,000, with a cliff: an estate over 105% of the exemption is taxed on its full value.
Oregon: $1,000,000.
Rhode Island: $1,838,056.
Vermont: $5,000,000.
Washington: $3,000,000 (2026). For deaths on or after July 1, 2026, graduated rates run from 10% to 20%, with the top rate back at 20%, per the Washington Department of Revenue tables.
District of Columbia: $4,988,400.

Example: an Oregon resident dies in 2026 with a $1.5 million estate that includes a $500,000 house. The $500,000 above Oregon's exemption is taxed at the 10% first-bracket rate, about $50,000 to the state, even though no federal estate tax is due. The estate may sell the house to pay it.

A nonresident who owns real estate in an estate-tax state such as Massachusetts, New York or Oregon may owe that state's estate tax on that property even if the home state has none. Many states allow a full marital deduction, but Massachusetts and New York have no portability, so a couple's planning differs from the federal rules.

Inheritance Taxes: Taxing the Beneficiary

An inheritance tax falls on the person who receives the asset. There is no federal inheritance tax. Five states have one for 2026 deaths: Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania. Iowa repealed its tax for deaths on or after January 1, 2025.

Who pays: the heir owes it, but the executor usually pays it from estate funds. The tax is on the value received, not on any gain.
Pennsylvania (2026): 0% to a spouse, 4.5% to lineal heirs, 12% to siblings and 15% to others. The Pennsylvania Department of Revenue gives a 5% discount for payment within 3 months, and the tax becomes delinquent after 9 months.
Pennsylvania also taxes real estate in the state owned by nonresidents.
Nebraska (2026): immediate relatives pay 1% above a $100,000 exemption; remote relatives pay 11%, and all others pay the top rate.
New Jersey (2026): spouses, children, grandchildren and parents are exempt; siblings and children-in-law pay 11% to 16% after the first $25,000. Other heirs pay up to 16%.
Maryland (2026): a flat 10% tax on heirs who are not exempt; spouses, children, parents and siblings are exempt.
Kentucky (2026): close relatives, including siblings, are exempt.

Example: a Pennsylvania father dies in 2026 and leaves a $300,000 house to his adult daughter. The tax is 4.5%, or $13,500, whether the estate sells or she does. A New York resident's Kentucky vacation home left to children owes no Kentucky inheritance tax.

State Income Tax on the Sale

Even in a state with no estate or inheritance tax, the estate may owe state income tax on the gain.

Most states tax capital gains as ordinary income in 2026, and real estate is taxed by the state where it sits. A Florida estate that sells a California house files a California nonresident fiduciary return and pays California tax of up to 13.3% on the gain. New York's top rate for 2026 is 10.9%, plus New York City tax where it applies.

Withholding at closing: several states withhold from nonresident sellers. In 2026, California takes 3⅓% of the sale price on Form 593, and New York uses Form IT-2663.
The estate reconciles any withholding on its state return.
No-income-tax states: Florida, Texas, Nevada and Washington do not tax the gain in 2026.
Washington's capital gains excise tax exempts real estate, but the state charges a graduated real estate excise tax on the sale.
State forms: an out-of-state estate selling an Illinois house files Form IL-1041 with Schedule NR. Set aside part of the proceeds for state tax.
Local transfer taxes of 1% to 2% can also apply at closing in some cities and counties in 2026.

Putting It All Together Across States

Where the person lived and where the house sits both change the result.

California: no estate or inheritance tax, but up to 13.3% state income tax in 2026 on any post-death gain.
New Jersey: no estate tax, and a child is exempt from inheritance tax. For a 2026 death, a sibling pays the Class C rates after the first $25,000. The estate owes state income tax on any gain.
Texas: no estate, inheritance or income tax; only federal rules apply.
Massachusetts: estate tax applies to estates over $2 million (2026). Long-term gains are taxed at 5%, plus a 4% surtax on income over $1,107,750 for tax year 2026.
Pennsylvania: for a 2026 death, a house left to a grandchild carries a 4.5% inheritance tax, since grandchildren are lineal heirs, due within 9 months. Any gain is taxed at the flat 3.07% income tax rate for 2026.
Arizona: community property gives the whole house a full step-up at the first spouse's death. There is no estate or inheritance tax, and 2026 income tax is a flat 2.5% rate.

Examples of Estate Home Sale Tax Scenarios

These four scenarios show how the rules play out. The first three appear in the table; the fourth, a surviving spouse selling within two years, follows it.

Scenario (2026 figures)	Key numbers	Federal tax result
1. Estate sells immediately at death value	Appraised at $500,000; sold for $505,000 two months after death	$5,000 gain at long-term rates; no estate tax
2. Estate holds and rents, then sells	$300,000 stepped-up basis; rented 3 years; sold for $400,000	About $21,900 on the $100,000 gain, plus state tax and depreciation recapture
3. Large estate with valuable home	$20 million estate; $5 million home bought for $1 million, sold a year later for $5.5 million	About $2.0 million estate tax plus about $119,000 on the $500,000 gain, before state tax

In Scenario 1, John's estate sells for only $5,000 over the appraisal, so the heirs receive nearly all the proceeds. In Scenario 2, depreciation taken while the house was rented is recaptured at up to 25%. Had an heir moved in and met the 2-year rule, much of the gain could have been excluded. In Scenario 3, the Lee estate's $20 million minus the 2026 federal exemption leaves $5 million taxable, and a state such as Washington or Illinois may add about $800,000. The gain is taxed at 23.8%. Total tax comes to nearly $2.9 million, and the heirs net about $17 million.

Scenario 1 shows why estates that sell quickly owe little income tax. Scenario 2 shows that only appreciation after the death is taxed, at estate rates that climb fast, with no homeowner exclusion. Scenario 3 shows a wealthy estate where estate tax dwarfs the capital gains tax, and the estate tax is triggered by value, not by the sale.

Scenario 4: Surviving Spouse Sells Within Two Years

A couple in a common-law state bought their home for $200,000. It is worth $900,000 when the husband dies in 2026. The wife's basis is $100,000 (her half) plus $450,000 (his stepped-up half), or $550,000. She sells for $920,000 twenty months later, in 2027, without remarrying. Her gain is $370,000, and the $500,000 surviving-spouse exclusion covers all of it, so she owes no federal tax. The Section 121 limits are fixed in the tax code and are not indexed, so the same amounts apply to 2026 and 2027 sales.

In a community-property state, both halves would step up to $900,000 at the 2026 death, leaving only a $20,000 gain on the 2027 sale. If instead she waits past the 2-year window, her exclusion drops to the single-filer $250,000 limit under the same unindexed 2026-2027 rules, and $120,000 of the gain becomes taxable.

Pros and Cons of Estate Selling the House

Should the estate sell, or should the heirs inherit the house and decide later? It depends on the family's goals, the tax picture and practical needs.

Pros of the estate selling (2026 rules)	Cons of the estate selling (2026 rules)
Estate bears the tax: any gain is paid before distribution, so heirs get net proceeds with no surprise bill later.	Higher tax rates: an estate reaches the top capital gains rate plus NIIT fast (above $16,250 of income in 2026). Heirs might pay less.
Faster closure: the executor can wrap up the estate sooner, with no ongoing upkeep, insurance or taxes draining estate funds.	Lost future appreciation or use: heirs miss further gains, and an heir who wanted to live there loses the chance.
Cash for debts and taxes: proceeds pay funeral costs, debts, income tax or estate tax without asking heirs for money.	Costs of sale: commissions, closing costs and repairs reduce net proceeds, and no heir can take the house as is.
Simplifies distribution: turns the house into cash that is easy to divide among beneficiaries, so no one fights over who gets the house.	Less flexibility: heirs cannot choose to buy out the others or keep the house as a rental.
Avoids co-ownership disputes: no arguments among heirs over selling, keeping or maintaining the home.	Emotional loss: a quick sale can upset heirs who hoped to keep the family home.

Having the estate sell makes the process simpler and settles the tax inside the estate. But it can cost more tax, and it gives up the exclusions an heir or surviving spouse could earn. Executors should weigh these points, follow any direction in the will, and ask the beneficiaries what they prefer.

Terms Executors and Heirs Will Meet

Estate: everything a person owned and owed at death, managed by an executor until distributed.
Executor (personal representative): the person who gathers assets, pays debts and taxes, and distributes the rest.
Step-up in basis: the reset of an asset's basis to fair market value at death. A home that fell in value steps down.
Basis: purchase price plus improvements. A home gifted before death keeps the giver's old basis.
Capital gains tax: tax on sale price minus basis and selling costs.
Estate tax: a tax on an estate's net value above the exemption, now permanent and indexed for inflation.
Inheritance tax: a state tax on the heir, set by relationship and amount received.
Section 121 exclusion: the home-sale gain exclusion for individuals, never for estates or post-death trusts.
Form 1041: the income tax return for estates and trusts. Schedule K-1 reports income passed to beneficiaries.
Form 8971: the statement that tells the IRS and each heir the estate-tax value of inherited property.
Section 645 election: a choice to treat a revocable trust as part of the estate for income tax.
Alternate valuation date: valuing estate assets 6 months after death, allowed only when Form 706 is filed and the election lowers both the gross estate and the tax.
Portability: a surviving spouse's use of the first spouse's unused federal exemption, claimed on Form 706.
Beneficiary: anyone entitled to receive estate assets under the will or state law.
Probate: the court process that validates the will and oversees distribution.
Trust: an arrangement where a trustee holds property for beneficiaries.
1031 exchange: a deferral of gain by swapping one investment property for another.

Avoid These Common Mistakes

Skipping the appraisal: without a date-of-death value, the estate cannot prove its basis. Order a written appraisal and keep it in the estate file.
Assuming no estate tax means no tax: small estates still owe capital gains tax on post-death growth, and a home gifted before death has no step-up at all.
Holding too long without a plan: the basis is highest at death. Every year of appreciation after that is taxable to the estate at compressed rates.
Overlooking state taxes: check both the state of residence and the state where the house sits for estate, inheritance and income tax, and hold back funds before distributing.
Missing the spouse's window: selling too late can cost a surviving spouse the joint exclusion (see the Section 121 section).
Paying heirs before the taxes: the executor can be personally liable. Set aside projected income tax and any estate or inheritance tax first.
Adding a child to the deed or gifting the house: a gift forfeits the step-up and may need a gift tax return. A trust or transfer-on-death deed avoids probate without that cost.
Reporting a basis that differs from Form 706: when Form 8971 was required, the sale basis must match the estate-tax value or the IRS can charge an accuracy penalty.
Poor recordkeeping: log every repair, property tax bill, insurance premium and commission from the date of death to the closing; many reduce the gain.
Going it alone: executors who skip professional help miss elections such as portability or alternate valuation. A missed portability election can usually be fixed within 5 years under Rev. Proc. 2022-32.

What to do next

Order a date-of-death appraisal and get an EIN for the estate, then file Form 56.
Decide with the heirs whether the estate sells or distributes the house, and check the surviving spouse's deadline.
Confirm whether Form 706 is required; if so, calendar the 9-month deadline and the 30-day Form 8971 deadline.
Match the Form 1099-S to Form 1041, deduct selling costs, and decide whether the gain stays in the estate or passes out on K-1s in the final year.
Check the state's estate, inheritance and income tax rules before the final distribution.

Frequently Asked Questions (FAQs)

Does an estate have to pay capital gains tax when selling a house?

Yes, if the house sells for more than its stepped-up basis. The estate or the heirs pay tax on that profit at long-term rates, regardless of holding period. No gain means no tax, but appreciation after death is taxable.

Do all estates pay estate tax on a home sale?

No. Federal estate tax applies only to estates above the federal exemption (see the exemption table above). State thresholds start at $1 million in Oregon. Selling a home does not trigger estate tax; the estate's total value does.

Can the estate avoid capital gains tax by selling the home immediately?

Usually, yes. A sale soon after death at the appraised value produces little or no gain. After commissions and closing costs, a quick sale often shows a small capital loss, which can pass to the heirs in the estate's final year.

Can an estate use the $250,000 home sale exclusion?

No. Estates and post-death trusts cannot meet the personal use test. A surviving spouse or an heir who moves in may qualify as an individual (see the Section 121 section).

If the heirs sell the inherited house, do they pay the taxes instead of the estate?

Yes. Once the house is transferred to the heirs, they report any gain on their own returns using the stepped-up basis. The estate has no gain in that case. Whoever sells handles the tax.

Are home sale proceeds from an estate taxable to the heirs?

Not as an inheritance. Cash or property received from an estate is not income. Only a taxable gain is taxed, and it reaches the heirs when the estate passes it out on a Schedule K-1, typically in its final year, or when the heirs sell the house themselves.

What happens if the estate sells the house for less than the appraised value?

The estate has a capital loss that offsets other gains, and unused losses pass to beneficiaries on the final return. The loss is deductible only if the house was held for sale and no beneficiary lived in or used it. If an heir moved in, the loss is a nondeductible personal loss.

Does a living trust avoid taxes on home sales after death?

No. A revocable living trust avoids probate, not tax. The home still steps up at death, and the trust pays capital gains tax on post-death gain just as an estate would. The trustee and executor can elect under Section 645 (Form 8855) to treat the trust as part of the estate for income tax.

Can I use a 1031 exchange for an inherited property sale?

Yes, if the property is held for investment. An heir who rents out an inherited house can exchange it for other real estate and defer the gain; an estate can do the same if it holds the property as an investment. Since 2018 only real property qualifies, with 45 days to identify and 180 days to close.

Will the IRS audit an estate home sale?

Rarely for the sale alone. The reported sale price must match the Form 1099-S, and the basis must be backed by an appraisal. When Form 706 was required, the sale basis must also match the value on Form 8971 and Schedule A. Large gains or high-value estates draw more attention.

Related reading