Tax Law (Questions About Taxes)/Gift tax?

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QUESTION: My father owned 32 acres. He gifted me. My brother and sister all 1/3. With the agreement that me and my sister would sell our part to my brother since he owned 30 acres that joined the land. The land was appraied for 9000 an acre. He paid me and my sister 60000. Payable over 5 yrs. I received 30000 from him this last year when I was diagnosed with breast cancer and was unable to work for 8 months. The gift and the agreement with my brother was all done at one time using the same lawyer. Would the income from this land be considered a gift. And could me and my husband claim 14000 apiece as a gift exemption or how would this be self with as far S tax goes. I took about a 20000 cut in income due to my cancer.

ANSWER: Pam,

Thanks for your question.

The gift occurred when your father gave you the land.  You basis in the land is his original cost.  The donor is the one who would pay any gift tax.

You have a sale to your brother, reportable on Schedule D.  Your gain is the excess of the sale price over your basis.  

Hope this helps.

John Stancil, CPA

---------- FOLLOW-UP ----------

QUESTION: Is a schedule d considered income? How is this taxed?  Before the 30000 our combined income is around 65,000. My in one last year was around 32,000. This year I made around 13000.  Is the percentage based on income or is there a certain percentage?

Answer
Your gain would be taxable income at the capital gain rate,  based on what you have told me, some of it would be eligible for the zero rate.  The remainder would be at the 15% rate.

Also, I did not mention that the tax would be on the sale price unless you could use the installment method.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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