Inherited money from property sold with gas production. Suggestions on how to minimize tax?
Apr 30, 2009 in
Questions And Answers
How to minimize tax burden on $ "inherited" from property sold to gas company. Land was deeded to grandchildren about a decade ago. Royalities from gas production have been split evenly during this time. They now have a buyer. How should proceeds be handled after distribution? Is this considered an inheritance? capital gain from sale? Are there certain ways to invest it that are better than other? short-term and long-term benefits? Pros or Cons?
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One comment
v b on April 30, 2009 at 6:40 pm
If the gift was completed over a decade ago, it wasn't inherited. Even you put "inherited" in quote marks.
It is long term capital gain. In 2008, some of this is taxed at 0% (if the gain plus other income is less than the 15% tax bracket) and the rest at 15%. If these grandchildren are under the age of 24, the taxes may be charged at the parents' rate.
The basis of the gift would be the giver's basis at the time of the gift LESS any depletion claimed since then. (It's even lower if the FMV was less, but I doubt that's the case.) You would use the amounts shown on the gift tax form filed in the 1990s (was there one?).
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