How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Merlo Your Own Question

Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
9573734
Type Your Tax Question Here...
Merlo is online now
A new question is answered every 9 seconds

my dad died in 1958 so my mom, brother, sister and I by court

Resolved Question:

my dad died in 1958 so my mom, brother, sister and I by court received 27.5 acers because my day and my uncle owned the property. 01/02/09 we closed on the property selling 25.45 acers for 205,000 dollars. My mom owned 1/3 ownership and my brother, sister and I owned 2/3 and my mom died in 01/2003 and left her part to us-leaving my sister 50% , my brother and I 25% each. Please explain to me how the outcome of this would be with the tax. If you cannot give me an answer to this question be explain how this would affect me.
Submitted: 5 years ago.
Category: Tax
Expert:  Merlo replied 5 years ago.
Hello sugarbabe,

You would be subject to long term capital gains tax on any gain you had from the sale of this property. In order to figure your gain, you must first determine your basis (cost) in the property. Your gain is then the selling price less your basis.

When you inherit property from someone, you automatically receive a "stepped up" basis in the property, meaning that your basis would be whatever the fair market value (FMV) was of the property on the day you inherited it. You would then add to that the cost of any capital improvements you made to the property during your time of ownership.

In your particular case, since this property changed hands several times through inheritance, you will have to do several calculations to determine your basis.

The first would be going back to 1958 when you first inherited the property. You would need to determine what the value was of the property at that time. Your mother inherited 1/3 (33.3%) and you and your brother and sister each inherited 2/9 (22.2% each). So assume for example that in 1958 the property was worth $50,000. The new basis for each heir would be as follows:

Mother - 33.3% of $50,000 = $16,666.67
You, your brother and sister - 22.2% of $50,000 = $11,111.11 each

When your mother passed away in 2003, you would then have to refigure your new basis using the same rules. If the property at the time your mother passed away was worth $100,000, then her share of that property (1/3) was worth $30,000. When your mother passed away, the new basis for each of you is figured as follows:

Your sister - Take her original basis of $11,111.11 and add to that 50% of what she inherited from your mother ($50,000). Her new basis is now $61,111.11 and she now owns 38.8% of the total land.

For you and your brother - Take your original basis of $11,111.11 and add to that 25% of what you inherited from your mother ($25,000). You each have a new basis of $36,111.11 and you each own 30.6% of the land.

When you sell the land, you take the selling price less your adjusted basis, and you would owe long term capital gains tax on any gain you had from the sale. The gain would be divided among the 3 of you according to the percentage you each own. The long term capital gains tax rate is currently capped at 15%.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you.
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and other Tax Specialists are ready to help you
Expert:  Merlo replied 5 years ago.
Hello again sugarbabe,

I just realized that the numbers I used as an example in refiguring your new basis once your mother passed away are wrong.

The numbers I used were based on your mother's share being worth $100,000 - and not $30,000 as orignally stated. Sorry for the confusion.

If you have any questions, let me know.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.