[jjlllnjm9]

I, along with my brother, sister, aunt and uncle just sold property that was inherited by my grandmother. We are trying to figure out what taxes are we liable for. My grandparents owned a farm. My grandfather died in 1984. It was then transferred to my grandmother. My father would have inherited it but he died in 1994 and deeded his portion of property over to us three kids before his death. My grandmother died in 2000. That is when we inherited the property. My aunt owned 45% My uncle owned 10% and us three kids owned 15% each. We have been told 3 different answers on what we have to pay. According to my grandparents attorney the property was always transferred when someone passed. We are now being told we owe capital gains from the time my grandfather died (1984),but we didn't inherit it until 2000. We all live in different states. Do we really owe capital gains from 1984 and do we need to pay estimated taxes starting on April 2008? Do we also owe for the states we live in and the state in which the property was sold in?

[IntlTax]

I need to better understand how you acquired the property. Did you acquire two interests at two different times? You mention that your father deeded property to you in 1994, but you also mention that you inherited property from your grandmother in 2000. Please explain.

[jjlllnjm9]

The lawyer for the estate said my father signed over his portion of the inheritance( the lawyer used the word deed) over to us three kids shortly before he died. He never mentioned anything to us. There was also a house and more acreage but that was sold a while ago. I am waiting for a copy of the will to see exactly how we inherited this. That's about all I know at this point. We just don't understand why we have to pay all the way back to when my grandfather died (1984) and not when my grandmother died (2000).

[IntlTax]

Your father's cost/basis of the property he received from your grandfather in 1984 was based on the fair market value (FMV) of the property in 1984. Because he gifted that property to you before he died, your cost/basis in the property is the same as was his cost/basis (based on FMV in 1984). For the portion of the property you received directly from your grandmother, you have a cost/basis in that property based on the FMV of the property in 2000. Thus, I agree with the advice you have already received.

[MukatA]

Who was the owner of the property at the time of death of your grandmother in 2000. If the title was still in the grandmother's name, then you inherited it in 2000.
If the title was in your father's name, then you inherited the property in 1994.

1. Any thing (money and property) you receive as inheritance, you (the receiver) don't pay any federal tax.
2. If you inherit a property, your cost basis is the valuation (Fair Market Value) of the property at the date of the decedent's death or the FMV (Fair Market Value) on the alternate valuation date if the personal representative for the estate elects to use alternate valuation.
3. If you sell the inherited property at a price up to your cost basis you don't have any taxes due. However, if you sell the property at price more than the cost basis to you, then you pay the taxes on the profit (sale price minus your cost basis).
4. Report the sale on schedule D of Form 1040.
Mukat A

[spring75]

Nine children have inherited a house. Three are living in the house. Are the six other children responsible for the taxes and insurance?

[spring75]

The property is not being sold but the three are living on the property. Taxes and insurance are due and the three feel that we should pay along with them.