Level 6

Is profit from sale of an empty land inherited from dad taxable?

Forum|Forum|3 years ago
November 29, 2022
2 replies
25 views

My client sold a piece of land he inherited from his father.

The dad passed away in 2016 and the mom added her son's name on the deed in 2017. The son sold it in 2022.

He will file 'married file joint' tax.

He received 1099S and he received $460,000 as his share and his mom received $1000,000.

What are the tax consequences for this sale?

Any help please.

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T

TaxGuyBill

Level 15

@singh wrote:

My client sold a piece of land he inherited from his father.

The dad passed away in 2016 and the mom added her son's name on the deed in 2017. The son sold it in 2022.

You need to clarify. Your second statement makes it sound like he received a Gift from his mother, not an Inheritance from his father.

And you mean that THEY sold it in 2022 (mother and son)?

Yes, it is taxable. I think your actual question should be "What is the Basis?".

Was it solely owned by the father? Or was it jointly owned by both father and mother? How was the title held before the father died? Was this in a Community Property State?

S

singhAuthor

Level 6

Thank you for your reply.

The title was jointly under father and mother only. When the father passed away in 2016 the mother added her son's name on the deed in 2017. Then in 2022 the mother and the son sold it.

The mother received $100,0000 and the son received 1099S for $460,000.

I hope the above info. would help.

Thank you in advance.

Accountant-Man

Level 13

Of course it's taxable. Under what concept would it not be taxable?

Perhaps you mean how much is the gain?

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S

singhAuthor

Level 6

So the $500,000 tax exemption rule for married couple only applies to residential home.

I believe I have to calculate the profit from the sale.

Thank you for your help.

sjrcpa

Level 15

The $250,000/$500,000 gain exclusion from tax applies only to one's principal residence and has ownership and use requirements.

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