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 Lev Your Own Question
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
870116
Type Your Tax Question Here...
Lev is online now
A new question is answered every 9 seconds

In 2015 is sold an oil and gas interest in western Oklahoma

Customer Question

In 2015 is sold an oil and gas interest in western Oklahoma I inherited from my late wife when she died in 2007. It has been unproductive for many years, including when she inherited it from her father in 1997. But beginning in 2012, it was re-drilled using modern techniques and began producing oil, gas, and gas distillates. How do I determine my cost basis for this property for the purpose of calculating the capital gain for my 2015 return?
Submitted: 10 months ago.
Category: Tax
Expert:  Lev replied 10 months ago.

The cost basis is based on how the property was acquired.

Specifically for inherited assets - the basis is equals to the fair market value (FMV) at the time the decedent passed away.

Thus - because you inherited the property from your spouse who passed away in 2007 - we need to know the fair market value at that time.
If you invested additional money into the property after that - the basis should be adjusted by that amount.

Customer: replied 10 months ago.
How do we figure that out?
Expert:  Lev replied 10 months ago.

If the decedent passed away in 2007 - we need to determine the fair market value at that time.

That is usually done by historical appraisal.

You may perform appraisal on your own - OR if you have difficulties - you may order any appraisal service.

The appraised value is usually based on comparable sales of similar properties in your area.

Expert:  Lev replied 10 months ago.

You may try your tax record - that might have a fair market value. You may contact the county where the property is located. The county usually perform appraisal to determine the fair market value for property tax purposes.

But anyway - if the property is not sold - the fair market value is determined by performing appraisal. There is no other ways.
It is in your interest to determine the correct basis as that will reduce your taxable gain.

.
I appreciate if you take a moment to rate the answer.
Experts are ONLY credited when answers are rated positively.
If you still have any doubts, need clarification - please be sure to ask.
I am here to help you will all tax related issues.