We want to leave our farm ground to a son in our will. But wondering about inheritance tax. What's the best way to

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Customer: Second opinion] We want to leave our farm ground to a son in our will. But wondering about inheritance tax. What's the best way to reduce the amount of taxes that will have to be paid. Should he just purchase the land now from us while we are still alive?
Answered by Judge Bill K ret. in 16 hours 7 months ago
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Judge Bill K ret.
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Judge Bill K ret.
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Judge Bill K ret.
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Judge Bill K ret., Expert

I am a retired federal Administrative Law Judge, currently engaged in the active practice of law. Please be advised that Just Answer is a website devoted to answering basic legal questions. It does not provide legal advice, and no lawyer-client-relationship is created.

In what state is the farm located?  What is the tax basis for the farm--i.e. how much did you pay for it?  What do you estimate to be the current value?  These are matters that I need to know to provide an answer.

Judge Bill K. ret.

Since I am still actively practicing law, I have to be away from this website for periods of time for court appearances, conferences etc. However, I will be checking back to see whether you have further questions or require clarification. Please check back occasionally for my responses. Also please bear in mind that I am located in the US Eastern time zone.

Customer
Hello. We are in Indiana. We paid 40k for the land . Right now Indiana farm ground prices are about $9700 per acre, so we are looking at a worth of 290k.
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Judge Bill K ret., Expert

I am a retired federal Administrative Law Judge, still engaged in the active practice of law. The law section of this website is a forum for legal experts to provide answers to basic legal questions. No lawyer client relationship is formed.

Please be aware that since I am actively practicing law I have other commitments such as court appearances and conferences. Consequently, I may be away from this website for extended periods of time, but I will check back for any reply.

Indiana does not have either an inheritance tax or an estate tax.  The tax free exemption on the federal estate tax is at 12 million dollars.  Conseqently you do not need to worry about inheritance or estate taxes.  The good news is that if the property is left to your son in a will, he will enjoy a stepped up basis for capital gains tax purposes at the current fair market value at the time of your death.

Judge Bill K ret.

Customer
Okay thank you!
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Judge Bill K ret., Expert

You are welcome.

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