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The loss of the family owned farm
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<blockquote data-quote="HDRider" data-source="post: 1679399" data-attributes="member: 17025"><p><h2><span style="font-size: 15px">Federal estate tax can reduce your inheritance before you get it</span></h2><p>Estate taxes apply at the federal level. They're charged directly against the estate, forcing the estate's personal representative to use cash or sell estate assets to pay the tax.</p><p></p><p>Estate taxes apply at the federal level. They're charged directly against the estate, forcing the estate's personal representative to use cash or sell estate assets to pay the tax.</p><p></p><p></p><p>In the absence of language in a will or trust to the contrary, <a href="https://www.fool.com/taxes/2020/11/05/how-to-make-sure-you-never-pay-any-gift-or-estate/" target="_blank">federal estate-tax liability</a> typically doesn't affect specific bequests of cash or property to beneficiaries. Instead, those who receive any property remaining after specific bequests are made end up receiving less than they would in the absence of the estate tax.</p><p></p><p>Fortunately, there is a relatively high exemption from the federal estate tax. Up to $11.58 million can pass to heirs without any federal estate tax, although exemption amounts on <a href="https://www.fool.com/taxes/2017/04/15/these-states-will-tax-your-assets-after-youre-dead.aspx" target="_blank">state estate taxes</a> in certain states are considerably lower and can apply even when the federal estate tax does not.</p><p></p><p>If the estate improperly fails to pay any estate tax due, the IRS has the power to collect from heirs. Technically, though, this isn't a tax on the heirs but rather a collection from inherited assets that should never have been distributed from the estate in the first place.</p><p></p><p>[URL unfurl="true"]https://www.fool.com/taxes/inheritance-taxes-to-pay/[/URL]</p><p></p><p></p><p>Question</p><p>Is money received from the sale of inherited property considered taxable income?</p><p>Answer</p><p>To determine if the sale of inherited property is taxable, you must first determine your basis in the property. The basis of property inherited from a decedent is generally one of the following:</p><ul> <li data-xf-list-type="ul">The fair market value (FMV) of the property on the date of the decedent's death (whether or not the executor of the estate files an estate tax return (<a href="https://www.irs.gov/forms-pubs/about-form-706" target="_blank">Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return)</a>).</li> <li data-xf-list-type="ul">The FMV of the property on the alternate valuation date, but only if the executor of the estate files an estate tax return (Form 706) and elects to use the alternate valuation on that return. See the <a href="https://www.irs.gov/forms-pubs/about-form-706" target="_blank">Instructions for Form 706</a>.</li> </ul><p>[URL unfurl="true"]https://www.irs.gov/faqs/interest-dividends-other-types-of-income/gifts-inheritances/gifts-inheritances[/URL]</p></blockquote><p></p>
[QUOTE="HDRider, post: 1679399, member: 17025"] [HEADING=1][SIZE=4]Federal estate tax can reduce your inheritance before you get it[/SIZE][/HEADING] Estate taxes apply at the federal level. They're charged directly against the estate, forcing the estate's personal representative to use cash or sell estate assets to pay the tax. Estate taxes apply at the federal level. They're charged directly against the estate, forcing the estate's personal representative to use cash or sell estate assets to pay the tax. In the absence of language in a will or trust to the contrary, [URL='https://www.fool.com/taxes/2020/11/05/how-to-make-sure-you-never-pay-any-gift-or-estate/']federal estate-tax liability[/URL] typically doesn't affect specific bequests of cash or property to beneficiaries. Instead, those who receive any property remaining after specific bequests are made end up receiving less than they would in the absence of the estate tax. Fortunately, there is a relatively high exemption from the federal estate tax. Up to $11.58 million can pass to heirs without any federal estate tax, although exemption amounts on [URL='https://www.fool.com/taxes/2017/04/15/these-states-will-tax-your-assets-after-youre-dead.aspx']state estate taxes[/URL] in certain states are considerably lower and can apply even when the federal estate tax does not. If the estate improperly fails to pay any estate tax due, the IRS has the power to collect from heirs. Technically, though, this isn't a tax on the heirs but rather a collection from inherited assets that should never have been distributed from the estate in the first place. [URL unfurl="true"]https://www.fool.com/taxes/inheritance-taxes-to-pay/[/URL] Question Is money received from the sale of inherited property considered taxable income? Answer To determine if the sale of inherited property is taxable, you must first determine your basis in the property. The basis of property inherited from a decedent is generally one of the following: [LIST] [*]The fair market value (FMV) of the property on the date of the decedent's death (whether or not the executor of the estate files an estate tax return ([URL='https://www.irs.gov/forms-pubs/about-form-706']Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return)[/URL]). [*]The FMV of the property on the alternate valuation date, but only if the executor of the estate files an estate tax return (Form 706) and elects to use the alternate valuation on that return. See the [URL='https://www.irs.gov/forms-pubs/about-form-706']Instructions for Form 706[/URL]. [/LIST] [URL unfurl="true"]https://www.irs.gov/faqs/interest-dividends-other-types-of-income/gifts-inheritances/gifts-inheritances[/URL] [/QUOTE]
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