Will there be any income tax liabilities if my father sells me several sections of land for a dollar? 5 Answers as of July 18, 2011

Will there be any income tax liabilities (other than increased income from increased property) if my father were to sell me several sections of land for $1.00?

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Steven J. Fromm
Steven J. Fromm | Steven J. Fromm & Associates, P.C.
Here is the problem with this home made tax strategy. This transaction is a gift and you will take a carryover basis in the property. When you sell the property you must use this basis to calculate gain. If dad has held this property for a long time the basis may be quite low. If you wait and receive the property at death you get a step up in basis to fair market value at the date of death. That would mean there is no gain if you were to sell it the day after he died. Do not be your own lawyer, with a fool for a client. Get a good estate planning attorney to set this up the right way. Whatever you pay to him you will save a lot more in ways you may not even be aware of at this point in time.
Answer Applies to: Pennsylvania
Replied: 7/18/2011
Tomas Ayuban
Tomas Ayuban | Tomas Ayuban
Your dad is free to sell these properties to you for nominal consideration. The biggest tax implication for you would be the potential step up in basis for property tax purposes. In other words, your property taxes may go up as result of the transfer of title.
Answer Applies to: Florida
Replied: 7/7/2011
Law Offices of Sanford I Millar, A Professional Corporation
Law Offices of Sanford I Millar, A Professional Corporation | Sanford Millar
The question has two elements. First, is there an income tax liability and second is there a gift tax liability. The following response consists of general information and should not be construed as establishing an attorney client relationship. A transaction for less than full and adequate consideration is generally considered to be a gift and should be reported for gift tax purposes.
Answer Applies to: California
Replied: 7/6/2011
Givner & Kaye
Givner & Kaye | Bruce Givner
Based on your facts, the answer should be "no" - at least for you. However, if your father has liabilities in excess of basis, that would change the answer for your father. There may, of course, be a gift that must be reported by your father if the sale for a dollar is for land worth more than a dollar. Bruce Givner, Esq. Givner & Kaye, A Professional Corporation 12100 Wilshire Blvd., Suite 445 Los Angeles, California 90025 310-207-8008; 818-785-7579 FAX 310-207-8708; 818-785-3027 Bruce@GivnerKaye.com GivnerKaye.com [cid:image001.gif@01CC3BDD.72EE8FF0] [cid:image002.gif@01CC3BDD.72EE8FF0] IRS CIRCULAR 230 DISCLOSURE: Tax advice contained in this communication (including any attachments) is neither intended, nor written to be used, and cannot be used, to avoid penalties under the Internal Revenue Code or to promote, market or recommend to anyone a transaction or matter addressed in this communication. This e-mail is covered by the Electronic Communications Privacy Act, 18 U.S.C. 2510-2521 and is legally privileged. This information is confidential information and is intended only for the use of the individual or entity named above. If the reader of this message is not the intended recipient, or the employee or agent responsible for delivering this electronic message to the intended recipient, you are notified that any dissemination, distribution or copying of this communication is strictly prohibited. If you have received this transmission in error, please notify us immediately by reply e-mail or telephone (310-207-8008) and destroy the original transmission and its attachments without reading them or saving them to disk or otherwise. Thank you.
Answer Applies to: California
Replied: 7/6/2011
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