Expert: Dottie Worthington - 6/9/2008

Question
My mother received 50 acres of raw/farm land from her employer when he died. Within the same year she gave it to me.  I paid the taxes from the City on it for 2007.  A farmer is leasing it for 2,500 a year.  My question is I am selling it and now have a contract on it.  The realtor feels it is worth 2,950 an acre but I sold it for 2,600 an acre.  I want to know what I might have to pay in taxes.  

I told my tax preparer about the gift and she said we would just take care of it when I file for 2008.  So nothing was mentioned about it in 2007 - I am just worried that she might not have all the right answers and don't want IRS troubles.  Your thoughts.

Answer
Dear Jean:
You will have to pay capitol gains, and if you are not sure of your tax accountant, then switch to one with your best interest. It will save you money in the long run. If you were going to reinvest the money in real estate you could do a 1031 exchange and avoid capitol gains.