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If you inherit farmland and 3 siblings agree to sell it in…

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If you inherit farmland...

If you inherit farmland and 3 siblings agree to sell it in 2018, will you owe taxes?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

3 siblings inherit 60 acres of Indiana farmland in 2018, and sell it. Do they have to pay income taxes next year

Accountant's Assistant: Is there anything else the Accountant should be aware of?

The seller is paying the improvements in drainage For $15,000 at the request of the buyer. No one from the 3 sellers lives on the property. The buyer already owns a big portion of other farmland and has leased the property from the owner who died recently. The 3 siblings are his children.

Submitted: 3 months ago.Category: Tax
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3/22/2018
Tax Professional: Robin D., Senior Tax Advisor 4 replied 3 months ago
Robin D.
Robin D., Senior Tax Advisor 4
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Tax Professional: Robin D., Senior Tax Advisor 4 replied 3 months ago

They will owe if they get more for the farmland than its value on the date the deceased passed away. They will all split the fair market value on the date they inherited as their cost plus the improvements and the sale price.

If the sale price is more than the FMV with the improvement they will pay tax on that portion. The pay when they file their returns.

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