[jeffkchuckk]

I just sold a farm I inherited. I want to use the money now to purchase a home to live in. What kind of taxes will I have to pay? Is this considered capital gain if I use all the money made from the sale?

[AtlantaTaxExpert]

The basis for that farm was "stepped-up" to the Fair Market Value (FMV) at the time of death of the decedent's estate. In effect, the appreciation on the farm from the date it was originally to the death date of the descendant was forgiven!

You MAY still have to pay a capital gains tax, but the basis of the farm is that FMV noted above, which means the basis is MUCH MORE than if the decedent sold the farm, so your capital gains tax will also be much less.

You can contact the executor of the estate to find out what the stepped-up FMV will be. Once you do the capital gains tax calculations, you will probably find that you owe little or no tax.

[MukatA]

There is no inheritance tax in the U.S. Your basis of the farm is its FMV on the date of death or any alternative date set by the estate administrator.
Read: Your U.S. Tax Return: Tax on Inheritances

[ebaines]

One other point - if this farm was your principal residence for at least 2 of the last 5 years you will avoid a significant portion (perhaps all) of any capital gain taxes that you would owe otherwise.