sale of property

[gman]

Highway department takes frontage access to land. The discussion of price and legal formality starts about 2 years ago. The wife dies before sale takes place, there would be a stepped up basis in the land, right?

[taxea]

and I would think the FMV for the sale

[jimmcg]

[QUOTE=gman;165246]Highway department takes frontage access to land. The discussion of price and legal formality starts about 2 years ago. The wife dies before sale takes place, there would be a stepped up basis in the land, right?[/QU



Stepped up basis would be in order absent sale taking place first.

[New York Enrolled Agent]

Highway department takes frontage access to land. The discussion of price and legal formality starts about 2 years ago. The wife dies before sale takes place, there would be a stepped up basis in the land, right?

I think you need to get more facts involving the "sale". Where were the parties in the sale process? Depending on the facts and circumstances, it could be FMV on DOD or perhaps IRD.

[TXEA]

New York Enrolled Agent brings up a critical point. If the sales contract was finalized prior to the death of the taxpayer, this could be IRD.

The prevailing rules is that the deceased taxpayer must have had an unconditional right to have received the proceeds prior to death. In this situation, the estate would have IRD.

IRS PLR 200744001 describes the Service's position in a situation where the taxpayer had a agreed in essence to the sale; however, there existed problems preventing immediate sale. In such case, the ruling determined basis under IRC Sec 1014(a) - No IRD.

IRC Sec 691

(a) Inclusion in gross income
(1) General rule
The amount of all items of gross income in respect of a decedent which are not properly includible in respect of the taxable period in which falls the date of his death or a prior period (including the amount of all items of gross income in respect of a prior decedent, if the right to receive such amount was acquired by reason of the death of the prior decedent or by bequest, devise, or inheritance from the prior decedent) shall be included in the gross income, for the taxable year when received, of:
(A) the estate of the decedent, if the right to receive the amount is acquired by the decedent’s estate from the decedent;
(B) the person who, by reason of the death of the decedent, acquires the right to receive the amount, if the right to receive the amount is not acquired by the decedent’s estate from the decedent; or
(C) the person who acquires from the decedent the right to receive the amount by bequest, devise, or inheritance, if the amount is received after a distribution by the decedent’s estate of such right.
(2) Income in case of sale, etc.
If a right, described in paragraph (1), to receive an amount is transferred by the estate of the decedent or a person who received such right by reason of the death of the decedent or by bequest, devise, or inheritance from the decedent, there shall be included in the gross income of the estate or such person, as the case may be, for the taxable period in which the transfer occurs, the fair market value of such right at the time of such transfer plus the amount by which any consideration for the transfer exceeds such fair market value. For purposes of this paragraph, the term “transfer” includes sale, exchange, or other disposition, or the satisfaction of an installment obligation at other than face value, but does not include transmission at death to the estate of the decedent or a transfer to a person pursuant to the right of such person to receive such amount by reason of the death of the decedent or by bequest, devise, or inheritance from the decedent.