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 > Ever done a 1031 Exchange?

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patperry2766

Saginaw Texas

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Posted: 01/13/18 03:35pm Link  |  Quote  |  Print  |  Notify Moderator

He (accountant) said there should be a step up at the time of his death because technically the trust should have been distributed then (confirmed on the IRS website). It wasn't until 2017 that the trust proceeds were distributed. The FMV of comparable land sales of similar size average $ 1868 an acre. I have an initial offer of about $2050 an acre now so it won't sting as much as we originally thought.

If I hold he land for less than a year before I sell it, the the price above the step up basis would be taxed as ordinary income bumping me up to 33% tax bracket. He said if I hold it at least a year, then it becomes capital gains and is only taxed at 20%.

How should the land be classified as a gift, inheritance or something other? I was never listed as a beneficiary of the trust, just my dad and any remaining siblings, but I am listed as a beneficiary on my dad's will.

* This post was edited 01/13/18 04:07pm by patperry2766 *


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jalichty

Lander, Wyoming 82520

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Posted: 01/15/18 01:15pm Link  |  Quote  |  Print  |  Notify Moderator

If the land gets a step-up in basis due to the death, then you have long-term holding period on the day you get the land. Therefore, the gain would be long-term and taxed accordingly. I am not your accountant, but if the accountants says the basis gets stepped up on the distribution from the trust, then it is not a gift. If it's not a gift, but an inheritance, then your holding period is considered long-term when it comes out of the trust. Even if it was a gift, the holding period is long-term as long as the decedent owned it the requisite amount of time.


John A. Lichty

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