Need opinions on basis.

[Twin Turbo Z]

Farmer passed in 2017. Wife never was part of his farming operation. Farm was was sold in 2017 through the estate, also in 2017. But the spouse held on to $200,000 in grain (coop stored). The grain was sold in 2019. No farm schedule so this is all on schedule d. Trying to figure her basis. Would you use grain prices as of farmers passing ? Or would you think the basis would be half (married couple) even though spouse never was listed on F schedule and did not help operate the farm. Im leaning toward stepped up basis. She never helped in operations of the farm. Im probably just over thinking crap as usual.

[TaxGuyBill]

I'll inject a few thoughts, but these are strictly OPINIONS, and not based on much. I also suspect things may depend on state law.


I view things as joint unless there is solid evidence otherwise. Even though she was not listed on the Schedule F and did not work for the farm, she presumably fully benefited from the income. So would view it as joint, which mean only a 50% step up (unless they are in a Community Property State).

However, you said the farm was sold through the Estate. Does that mean a 1041 was filed for the Estate? Did the rest of the farm receive a 100% step up in Basis? IF it did and IF the Estate return was correct, then I would thing the grain would be the same. Did you prepare that return, or did somebody else?

But if an Estate return was filed, shouldn't this grain also be on the Estate return? If it was soled owned by the husband, unless the Estate return distributed to the wife, it is not the wife's income, it would be the Estate's income.


Sorry, I probably am just confusing the issue, but maybe my thoughts will help you or others to figure out the situation.

[Twin Turbo Z]

We didn't do the estate. Her lawyer had a friend, you know how that is. According to her, the grains and all assets went through the estate and were distributed to the heirs. She got the grain back as part of her distributions. Wanted to hold onto it till prices went up. Hence my thinking stepped up value. But then again, when the grain was harvested and stored the farmer was alive and they filed jointly. Hence the half value (50%). But regulations also state a married couple farming should do two F schedules or a partnership. Which only the farmer was listed and paid SE tax. I should look at the estate return that was prepared and verify the grain was included.