Legal Question in Tax Law in Ohio

Tax Ramifications of Farmland Sale

Grandmother sells zero cost basis parcel of farmland for $50,000 to her son. Parcel has market value in excess of $200,000. Lifetime gifts to son remain under $1 million. I believe an informational gift tax return was filed.

Question: Could IRS come back on grandmother and demand capital gain tax be paid on market value of farm? ie. would the IRS treat the entire transaction as a sale instead of a gift since some consideration was paid? Does the fact that a gift tax return was filed negate this concern?


Asked on 3/05/02, 3:51 pm

1 Answer from Attorneys
WILLIAM BRANDWEIN WILLIAM A. BRANDWEIN, A PROFESSIONAL LAW CORP.

Re: Tax Ramifications of Farmland Sale

What you have here is a part sale and part gift. If there was no consideration then it would be a gift. Since there is a consideration and there is no basis in the property, there is a gain of $50,000 and a gift of $150,000..

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Answered on 3/05/02, 7:33 pm


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