Example # 4

Jane’s land is worth $20 million and her tax cost basis if $5 million. Upon her death, she will be required to report a $15 million gain. Perhaps up to $1 million of this gain may be exempt from tax. If the land continues to be farmed by her heirs, then the tax is not owed to the IRS. However, if the heirs do not farm the ground or stop farming the ground, then it is likely that the tax will be due with interest. Let’s assume that the heirs stop farming after 10 years. They would owe tax of $6,510,000 (assuming a 43.4% capital gains rate on all $15 million gain) plus interest plus any related state income taxes. Also, a lien will be placed on the property at the time of Jane’s death (this assumes that President Biden’s proposals mimic the STEP Act).

Note the last line concerning GOVERNMENT LIENS.


https://blogs.claconnect.com/agribusiness/the-american-families-plan/?__hstc=157872037.3a9c64d66cf2af13822ef08b699ffbb9.1610481412029.1618923312828.1619700531480.29&__hssc=157872037.1.1619700531480&__hsfp=1654051258&_ga=2.259618249.2137078965.1619700529-441222905.1610481410