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 Robin D. Your Own Question
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15182
Experience:  15years with H & R Block. Divisional leader, Instructor
Type Your Tax Question Here...
Robin D. is online now
A new question is answered every 9 seconds

I am a single 68 year old male. I inherited land from my

Customer Question

I am a single 68 year old male. I inherited land from my father when he passed away in 1995. If I sell that land for $70,000 this year, can I spread out that revenue of $70,000 over a 7 year period on my tax return showing a income received of $10,000 per year and reduce my Adjusted gross income per year?
Submitted: 8 months ago.
Category: Tax
Expert:  Robin D. replied 8 months ago.

Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

Expert:  Robin D. replied 8 months ago.

You would not be allowed to spread the gain over a 7 year period. The year of sale is the year you report the and pay any tax.

You will only be taxed on the gain. The gain is the difference in the sale price and the Fair Market Value of the land when your father passed away. This would mean that you would not pay tax on the entire $70,000, just the amount that was over the fair market value.

If you finance the sale and receive only a portion for 7 years, then you can use the installment method for reporting. You would report just a portion of the principle and the interest each year as income.

Please let me know if you need clarification. If you do not then a positive 5 star rating is appreciated so I get credit for the response. (look for the STARS or SMILEY FACES)

Expert:  Robin D. replied 8 months ago.

Income averaging for all taxpayers was a way to effectively lower the tax rate on this year's income by spreading it over a number of prior (lower income) years to find an average tax rate for it.

Repealed:Under the Tax Reform Act of 1986, the general 4-year income averaging rule expired in 1986.

Expert:  Robin D. replied 8 months ago.

I add the above in case you were thinking of the older law that allowed for a lower tax.