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 Jax Tax Your Own Question

Jax Tax
Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1377
Experience:  JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
59761513
Type Your Tax Question Here...
Jax Tax is online now
A new question is answered every 9 seconds

I inherited land and family farm debt about 8 years ago and

Resolved Question:

I inherited land and family farm debt about 8 years ago and am considering selling part of the land to pay off all that debt. Is the debt I assumed from the estate able to be subtracted from the capital gains from the land sale?
Submitted: 3 years ago.
Category: Tax
Expert:  Jax Tax replied 3 years ago.

Jax Tax : The assumption of debt is added to the stepped up basis and then used prorata based on the portion sold.
Customer:

In layman's terms, please?

Jax Tax : So your current basis is the FMV of the property on the date of death plus the debt that was assumed. Use this basis. You then determine for example that the portion sold is say 10% of the total value, you use 10% of the basis against the sale price to determine gain. Have you used the property as your main residence?
Customer:

no, it is agriculture land. I've been paying the interest on the note each year, but hardly paying any of the principal at all. My land value has jumped so high that it seems to me it makes sense to sell one of the two fields in order to pay off all the debt, but I'm having a tough time finding information to see if I'm on solid ground with this.

Jax Tax : Have you been renting the land or just holdin it?
Customer:

renting it. First on a share basis, but the past 5 years on a cash basis

Jax Tax : So you have been claiming the rent on Sch E?
Customer:

Can't say off top of my head if it is on Schedule E, but I have been claiming the rent.

Jax Tax : Good. Are there any buildings on the land that have been depreciated?
Customer:

to work with this whole thing would I get a tax person in Nebraska, where the land is or can a MA tax person find the info too?

Customer:

I just got my new tax valuation and the 2011 tax on this tract has gone from 189675.00 to the current level of 235980.00. the ag land is taxed at 77% of value. So would that mean the land is supposedly worth 23% more than the current level?

Jax Tax : Ok. Anyone can do the return for you. Just make sure you have a copy of last year. You will determine basis as I stated above reduce by any depreciation claimed if any. Then divide the basis on a value percentage of the portion sold. That will do it. The issue you need to over come if thaw sale price will not full pay the bank is getting the bank to release that portion of the property from the mortgage lien. It shouldn't be that hard. If this helps please accept so that I receive credit and feel free to leave a comment. Do you have any other questions?
Customer:

Actually, when I first inherited the land it would have taken both tracts to cover the debt. Now the land has increased so much in value that the one tract will more than pay off all the debt. that's why I was hoping that I could use all the tax savings at once, but you have cleared that up for me.

Customer:

Thanks for the help.

Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1377
Experience: JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
Jax Tax and 2 other Tax Specialists are ready to help you

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.