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My wife and her Brother inherited some land in Waxahachie

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Texas in 1992 and to...
My wife and her Brother inherited some land in Waxahachie Texas in 1992 and to my knowledge paid no inheritance tax at the time. The land was sold this year 2015 for exactly $200,000. Both my wife and her Brother received $100,000 each and tax forms were completed and sent to the IRS on the sale date.
My question is as follows: what tax would be due on our 2015 return for the $100,000. I have been told that it would be treated as capital gain but I can find no cost basis of what the property was worth at the time of inheritance versus what t was sold for.
Submitted: 2 years ago.Category: Tax
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11/18/2015
Tax Professional: Robin D., Senior Tax Advisor 4 replied 2 years ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 16,236
Experience: 15years with H & R Block. Divisional leader, Instructor
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Hello

You were told correctly. The gain (difference in cost plus improvements and sale less costs to sell) will be taxed as a capital gain.

You will need to look back at the tax records for the value when the property was inherited. You can contact a real estate professional and see if they have records from back then (with the internet research can be used).

If you do not get the fair market value on the date of death you will have to use $0.

That would mean you pay tax on the entire $100,000.

I hate to have to tell you that but the IRS requires the basis.

Respond below please.

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Tax Professional: Robin D., Senior Tax Advisor 4 replied 2 years ago

Willard, you stated "I can find no cost basis of what the property was worth at the time of inheritance ", where have you tried to find this info?

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Tax Professional: Robin D., Senior Tax Advisor 4 replied 2 years ago

Hi

I looked into the USDA resources (I know USDA finances many loans in Texas) for past land values.

You can see their 1993 info here

http://peanut.tamu.edu/files/2012/04/ALV94-9811.pdf

Most land that was not improved was at $700 an acre.

Let me know if that link above worked for you.

Thanks

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Tax Professional: Robin D., Senior Tax Advisor 4 replied 2 years ago

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