Questions about capital gains tax on farmland sale

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Ilyce Glink and Samuel J. Tamkin

Q: My great-grandfather was a farmer and had about 23 acres when he died. My grandfather passed away before my great-grandfather. The land was put in a trust for my mother and uncles. My mother passed away two years ago.

The land has now been sold, and I’m supposed to get a third of the proceeds per her will. What do I have to pay in taxes on the money? I know there are capital gains on the property, but how does that work? Do we use the value from when my great-grandfather passed as a base?

A: Thanks for your question. We have good news for you. When your great-grandfather died, his land passed down to your mother and your uncles. For simplicity’s sake, we’ll assume that your great-grandfather’s estate was under the federal estate tax limits when he died, and his estate did not have to pay any federal estate taxes at that time.

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