House/farm sale

[TAX4US]

What I have is a purchase in 1990 1 contract stating house with 3 acres X$ and 50 acres @ X$ for a total of X$. 1 loan for whole thing.TP farmed the 50 acres since 1990 always had a loss. Now in 2013 tp sells the 50 acres to joe and sells in 2014 the house and 3 acres to mary. TP could not get 1 contract for whole. I believe that I have 2 separate sales. Farm land with no exclusion and house with exclusion. I do not think I can make this into 1 sale with full exclusion against everything. Correct me if my thinking is bad. Many thanks

[AJsTax]

One sale would not change the facts

Even if it was all one sale you could not use the 121 exclusion against the sale of the farm land. That is a business asset and must be reported as capital gains against the basis of the purchase price prorated between the assets.

[Burke]

Since the original purchase contract listed a specific price for the house +3 acres and a specific price for the 50 acres of farm land, it should be no problem determining the farm's original cost.

[TAX4US]

Thats the way I saw it. TP read somewhere? he could add land to house and sale as long as it was within 2 years of each other. Don't you just love it when they know more than you.

[ChEAr$]

To reinforce what others have said, I lost a client (the next year) because he thought that all the land (on which he had farming losses just as your client did) should be part of the principal residence gain and therefore postponed on that particular form we used.. 2119? But he did have a reportable gain on the 95 acres, including barn.

[Burke]

Thats the way I saw it. TP read somewhere? he could add land to house and sale as long as it was within 2 years of each other. Don't you just love it when they know more than you.

That is an option that a homeowner can use when the land was always used as part of the residence property. In this case, it was purchased as a farm and used as a farm. So no go for him.

[ddoshan]

This is where he is coming up with the 2 year thing:

Vacant land. The sale of vacant land is not a sale of your main home unless:
•
The vacant land is adjacent to land containing your home,

•
You owned and used the vacant land as part of your main home,

•
The separate sale of your home satisfies the requirements for exclusion and occurs within 2 years before or 2 years after the date of the sale of the vacant land, and

•
The other requirements for excluding gain from the sale of a main home have been satisfied with respect to the vacant land.