Have a somewhat complicated situation - at least for me it is.
My grandparents owned about 100 acre farm - this land was either acquired by them or my great grandparents, not really sure. I think the total cost was around $6,000 in the late 1920's or 30's. When my dad retired, he and my mom moved to the farm to live with my grandparents. Grandparents gifted deeded the farm to my mom (their daughter) in 1992, and my mother gift deeded 1/2 to my dad.
My grandparents have since passed and my mom passed away in 2004, but her will was not probated.
My dad and his current wife got to the point last year that they could not live by themselves on the place any longer. They are now in an assisted living situation and we decided to sell the farm. Just sold it in October for a pretty sizeable sum of money. In the process of selling, the title company said that because my mom's will was not probated that her half of the farm was passed to her heirs - me and my brother, per state law. This was news to all of us. I had always assumed my mom's half went to dad when she passed. It would have, had he probated her will.
So when the property sold, my dad got 1/2 of the proceeds and my brother and I each got 1/4 of the proceeds.
I think my brother and I got a step up in basis on our half interest when my Mom passed in 2004, but we have no idea what the market value of the place was in 2004. Obviously it is in our best interest to have as high a market value as is reasonable to lower our capital gains taxes.
My dad's situation may be even more complex. I think his cost basis is what the land was originally purchased for ($6,000), plus the cost of any improvements made - I guess over almost 90 years of ownership of my grandparents and parents, but not sure about that. Nor would I really know or don't have records of what improvements were made or how much they cost. I do know that my dad renovated the farm house in 2008 for about $180k. Since this was also his home, I assume he (and his wife, if filing jointly) can take the $500k exemption.
I think I need a good CPA to consult with and help sort this out. I think we will all need to pay estimated taxes by Jan 15 to avoid underpayment penalties.
My grandparents owned about 100 acre farm - this land was either acquired by them or my great grandparents, not really sure. I think the total cost was around $6,000 in the late 1920's or 30's. When my dad retired, he and my mom moved to the farm to live with my grandparents. Grandparents gifted deeded the farm to my mom (their daughter) in 1992, and my mother gift deeded 1/2 to my dad.
My grandparents have since passed and my mom passed away in 2004, but her will was not probated.
My dad and his current wife got to the point last year that they could not live by themselves on the place any longer. They are now in an assisted living situation and we decided to sell the farm. Just sold it in October for a pretty sizeable sum of money. In the process of selling, the title company said that because my mom's will was not probated that her half of the farm was passed to her heirs - me and my brother, per state law. This was news to all of us. I had always assumed my mom's half went to dad when she passed. It would have, had he probated her will.
So when the property sold, my dad got 1/2 of the proceeds and my brother and I each got 1/4 of the proceeds.
I think my brother and I got a step up in basis on our half interest when my Mom passed in 2004, but we have no idea what the market value of the place was in 2004. Obviously it is in our best interest to have as high a market value as is reasonable to lower our capital gains taxes.
My dad's situation may be even more complex. I think his cost basis is what the land was originally purchased for ($6,000), plus the cost of any improvements made - I guess over almost 90 years of ownership of my grandparents and parents, but not sure about that. Nor would I really know or don't have records of what improvements were made or how much they cost. I do know that my dad renovated the farm house in 2008 for about $180k. Since this was also his home, I assume he (and his wife, if filing jointly) can take the $500k exemption.
I think I need a good CPA to consult with and help sort this out. I think we will all need to pay estimated taxes by Jan 15 to avoid underpayment penalties.
A wealthy American industrialist looking to open a silver mine in the mountains of Peru.
