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Inheritance Question
Posted on 2/5/19 at 9:04 am
Posted on 2/5/19 at 9:04 am
Needing some general answers to a situation that has come up. My last remaining parent passed away last week, so the work of asset distribution is soon to begin. (NOTE: I have an appointment with Estate lawyer next week). Just the cliff notes here: 3 siblings including myself. Parents put all accounts on a TOD with all 3 kids on account name including all land. A million in cash in the bank. Land will equal another million plus. Land has been in family 50 plus years so bought cheap. 75.00 acre. Worth 3000.00 acre now. Not wanting to sell, but if we did what are the tax ramifications? They left no debts. Just a hard working couple who saved their whole lives. Thanks in advance...
2
Posted on 2/5/19 at 9:12 am to KCkid
Your tax basis in the property will be stepped up to the market value at the date of death of your parent.
Posted on 2/5/19 at 9:16 am to KCkid
Sorry for the loss of your parents. Do well with the $500K. Pay it forward. 
Posted on 2/5/19 at 9:17 am to LazloHollyfeld
That was a big question of mine. thanks
Posted on 2/5/19 at 9:22 am to Brobocop
I plan on it. Thanks.
Posted on 2/5/19 at 11:51 am to LazloHollyfeld
quote:
Your tax basis in the property will be stepped up to the market value at the date of death of your parent.
This is truly an amazing part of the tax law.
This came into being back when the estate tax level was very, very low (relatively speaking). The idea was that since you had to pay tax on the value of the estate, it was wrong to also have to pay tax when you sell the assets. So, the solution was a stepped up basis.
Now, very few people actually have to deal with the estate tax, but everyone gets the benefit of the stepped up basis.
I've always felt, that from a matter of fairness in taxation, we should completely abandon the estate tax, but we should also completely abandon stepped up basis. You should never have to pay tax until the asset is sold. But you should also not be able to avoid tax just because someone died - if you are also getting to keep the sales proceeds.
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