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Lovegrandkids · Mar 1, 2011, 07:42 PM

Mother passed away in 1997 leaving a house & 77 acres to 4 children with quick-claim deed. The place appraised for $278000.00 month after her death. Property is located in Missouri. We sold the farm in 2010 for $250,000.00. Mother raised a few cows and always showed a profit on her taxes of maybe $1000 or less-never took a loss. Do we have to report the sale on our taxes for 2010? And, if so, how do we show selling at a loss?

ebaines · Mar 2, 2011, 06:52 AM

You need to tell us whether the property continued to be used as a working farm for the past 13 years. If it was a working business property, then the calculation of any gain (or loss) depends on whether you took depreciation on the land and equipment since inheriting it. But if the farm was not a working business, then it is considered to be personal property. Unfortunately you can not deduct losses on the sale of personal property. However, you will probably receive a form 1099-S from the title company that documents the sale to the IRS, so I suggest that you report your portion of the sale proceeds on Schedule D, but show $0 as the gain.

Lovegrandkids · Mar 2, 2011, 08:03 PM

Sorry, I put the year of death in wrong. She actually passed away in 2007, so we sold the place three years after she died. No one claimed any farm profit or loss during those three years. We have not received a 1099-S from the title company, but I think reporting on Sch D with a z40 gain or loss would be a good idea. Thanks for the advice.

ebaines · Mar 3, 2011, 06:27 AM

Originally Posted by Lovegrandkids

We have not received a 1099-S from the title company, but I think reporting on Sch D with a z40 gain or loss would be a good idea. Thanks for the advice.

Just remember that if it's a gain you do indeed have to report the gain, but if it's a loss then you report $0 loss. Also, assuming that the property is split among all 4 children, each would report 1/4 of the proceeds amd 1/4 of the cost basis.