inheriteted ground

[Bjay]

I have a client who back in 1966 inherited some farm ground from an aunt. The stipulation was the client's father would receive any income from it until his death which he did. He passed away this past year and the client has been offered a very substantial amount for the farm ground. My question is, does she have a basis in the ground from 1966 or since her father died when she actually could receive income from the crops if she chose to do so?

[taxxcpa]

I think the relevant question would be when did the title ti the property pass to your client. That would be the date inherited regardless of who got the income.

[arlo]

Post a reply to the thread: inheriteted ground

I might add that the land woiuld have a step-up in value. That would be your cost basis.
You need to have an appraisal to establish the cost.

[Burke]

The situation you describe is a life estate interest to the father. Under this restriction, the client, who had a remainder interest, probably did not have the power to sell the property as long as the father was living. This should have been in the deed, but courts have held it can be implied by virtue of the fact that the father DID receive the income all those years. When he died, she inherited it free and clear, and it gets a stepped up basis to FMV at the father's DOD.