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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 586
Experience:  10 years experience
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Are taxes due on the sale of grain inherited from a

Customer Question

Are taxes due on the sale of grain inherited from a parent's farming estate? Is the grain treated like real estate or stocks, where tax is owed on the difference between the basis at time of death and proceeds from the sale of the grain?
Submitted: 9 years ago.
Category: Tax
Expert:  Brad replied 9 years ago.

Good Day,Customer

Can I have a little more detail?

Who owns the land from which the grain was produced?

Was the grain in storage before the death of the parent?

My favorite quote from Supreme Court Justice Oliver Wendell Holmes is: "If someone owns a tree, to transfer taxability with respect to the fruits of that tree, you must
transfer more than just the fruit. All or part of the tree itself
must be transferred".

To resolve this dilemma, we need to understand the legal status of "that tree".


Customer: replied 9 years ago.
Reply to TaxPro's Post: Grain was in storage on parent's land. Approximately three years prior to death, the parent created joint ownership of the land with the children. Grain was accumulated over 15-20 years of farming operations. Some grain was sold as feed, so was less than basis. Long-term storage does that to grain.
Customer: replied 9 years ago.
Note also that the grain was included in the estate of the parent. Taxes were paid as apporpriate on that estate.