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C
CRM2182
Level 5
January 27, 2025
Question

Life Estate

  • January 27, 2025
  • 1 reply
  • 5 views

Taxpayers grandparent died and had a life estate. The life estate granted Taxpayers aunt to farm the ground as long as she wanted, then the ground would go to the TP. TP is paying the aunt $15,000 (7500 in 2024 and 7500 in 2025) to give up her rights to farm so TP can take control of the property. Is the payment deductible to the TP for farm expenes (TP is farming the ground) and does a 1099 or other form need prepared to send to aunt? 

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1 reply

BobKamman
BobKamman
Level 15
January 27, 2025

Buying the life estate is no more deductible than buying the farm outright.  Someone should file a 1099-S for the transaction.  

If it's a bargain sale, the aunt may need to file a gift tax return.  

    C
    CRM2182Author
    Level 5
    January 27, 2025

    Thank you! 

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