Cost basis on inherited farmland

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Topic Author
rkh1947
Posts: 7
Joined: Sun Feb 26, 2012 10:46 am

Cost basis on inherited farmland

Post by rkh1947 »

I have searched and read the posts regarding this topic but did not see the answer to my question.
We have inherited farmland which was listed in the estate inventory at the county's tax valuation for inheritance tax calculations.
We also had a subsequent retrospective appraisal done, the two values are greatly divergent. We are now considering selling the land.
My question: Does anyone know if there is a process for determining what the IRS would approve as the cost basis, prior to an actual sale. The difference in capital gains tax could be huge if the IRS does not accept our professional appraisal.
Thanks for any input
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N1CKV
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Joined: Wed Mar 21, 2012 8:18 am

Re: Cost basis on inherited farmland

Post by N1CKV »

BIGal
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Joined: Fri Oct 26, 2012 9:34 pm

Re: Cost basis on inherited farmland

Post by BIGal »

I believe that you should involve an attorney and possibly a CPA to help assess your situation. The cost may be offset by the tax savings. This suggestion depends on the amount of property you are talking about, is it 10 acres or 640? I would think professional advice would be better than depending on someone from this or another online forum. Good luck.
Gill
Posts: 6969
Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: Cost basis on inherited farmland

Post by Gill »

Why did you use the county’s tax valuation for inheritance tax purposes? Was the later appraisal made as of date of death? Can you amend the inheritance tax return to reflect the higher value? Without such a step you are on very weak grounds using the low figure for inheritance tax purposes and then attempting to use the higher figure for income tax purposes.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
Topic Author
rkh1947
Posts: 7
Joined: Sun Feb 26, 2012 10:46 am

Re: Cost basis on inherited farmland

Post by rkh1947 »

We used the county land valuation based on our attorney's advice in Dec 2008. Later in 2009 , we contacted a reputable farmland appraiser as an afterthought. His appraisal was performed retrospectively to the date of death (2008). I will check to see if the inheritance tax valuation can be amended if there would be a tax advantage.
Thanks for the advice
Gill
Posts: 6969
Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: Cost basis on inherited farmland

Post by Gill »

I didn’t realize this was ten years ago. Doubt if you can amend the inheritance tax return and you are probably stuck with that for your basis. Not the best advice from the attorney.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
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