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In June 1999 I inherited 36 acres of farmland after the death

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of my mother. When the...
In June 1999 I inherited 36 acres of farmland after the death of my mother. When the estate was appraised the land was appraised at $2400/acre. I am going to sell the land and have found a buyer who will pay $4,500/acre. This means a gain of $75,600 (4500 minus 2400=2,100 X36=75,600) My 2008 federal tax return has a taxable income of $23,994. My state (Ohio) return taxable income is $35,637. What taxes will I HAVE TO PAY?
Submitted: 8 years ago.Category: Tax
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Answered in 13 minutes by:
4/1/2009
Tax Professional: Lev, Tax Advisor replied 8 years ago
Lev
Lev, Tax Advisor
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Please verify that the appraisal back in 1999 was correct. You might want to contact a professional appraiser who will provide historical appraiser of the inherited property.

 

You correctly determines the capital gain.

That would be long term gain - taxed at reduced rate - not more that 15%

Part of the gain that fall into 15% tax bracket and below will be tax free.

 

Thus - if you are single the 15% tax bracket is limited by $32,550

So $32,550 - $23,994 = $8556 will be tax free and

$75,600 - $8556 = $67044 will be taxed at 15% long term capital gain rate.

Ohio state taxes will be about 4.5%

 

Let me know if you need help with reporting.

 

Lev
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Customer reply replied 8 years ago
Does this mean that federal tax owed will be $10,056 and state tax $3,016! i hope this is wrong.
Tax Professional: Lev, Tax Advisor replied 8 years ago

 

Based on estimation above and my assumptions - that is correct. I wish to bring better news for you...

 

That is why I asked you to verify if the FMV back in 1999 was determined correctly - if the value was below the market value - you need to order a new historical appraisal.

 

Also I estimated based on 2008 tax rate and on assumption that you are single.

 

Lev
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