He Bought the Farm

Today TaxMama hears from Barb in the TaxQuips Forum with a simple question.  “The farmer is selling his farm, and everything on it, to his son for $1.  The basis of the farm and the machinery is approx $100,000 and FMV approx $510,000. How do I file their Form 4797?
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Dear Barb

That’s not a sale.  It’s a gift.

If this is what they want to do. Fine.

File a gift tax return for everything over $13,000.

Or if Mom is still with dad, over ,000.
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Or if son is married, Mom and Dad can give the gift to son and wife = ,000.
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With a $5 million lifetime gift tax exclusion for each – Mom and Dad, there’s lots of room to do some gifting.

Nothing they do, short of a legitimate FMV sale will change the basis anyway.
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And remember, you can find answers to all kinds of questions about selling to related parties and other tax issues, free. Where? Where else? At www.TaxMama.com.

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