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I am selling agriculture land in a rural area that I have owned

Customer Question
for 15 years but this...
I am selling agriculture land in a rural area that I have owned for 15 years but this was land transferred from a relative and I therefore have no cost base. Is the full selling price of the land taxed at long-term capital gains rates all in the year of the sale?
Submitted: 7 years ago.Category: Tax
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Answered in 8 hours by:
9/2/2010
Tax Professional: Robin D., Senior Tax Advisor 4 replied 7 years ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,881
Experience: 15years with H & R Block. Divisional leader, Instructor
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Robin D :

Hello and thank you for using Just Answer.
You stated that the land was transferred to you from a relative. If this relative gave you the property then you have the same cost basis as the relative had when they gifted the property to you. If you inherited the property your basis would generally be fair market value on date of death. So depending on how you actually acquired the property would determine your basis and thus determine your gain or loss.
Land and depreciable property you use in farming are not capital assets. Noncapital assets also include livestock held for draft, breeding, dairy, or sporting purposes. If you were using this land in the business of farming then you would show the sale on Form 4797 as ordinary income. If this is just rural land that you received and you were not using it as farm income then you would report the sale in the year of the sale and capital gains would be shown in same year using Schedule D.
I hope this information is helpful,

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,881
Experience: 15years with H & R Block. Divisional leader, Instructor
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