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sale of inherited farm land


Janitor Bob

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client's father dies in 2016 and client and 9 other family-members equally inherit farmland valued at 200,000 (per appraisal). siblings rent the farmland for rental income in 2016 and 2017 via a farm LLC...final 2017 LLC return filed (by another preparer). January 2018, siblings sell farmland for $880,000 and split proceeds 10 ways (my client's portion per 1099-S is $88,000)....so I am assuming this would be a gain for my client of $68,000 (88,000 less 20,000). but would this be business gain/loss since farm was rented in 2016 and 2017 or would it be non-business since farm was NOT rented in 2018?

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If your question is about 199A QBI, it doesn't matter as  Cap Gains are  not included in 199A.

My concern would be the valuation.  How does farmland increase in value nearly 4.5 times in 2 years?

Was it rezoned for housing, commercial, industrial use?   Did soething else happen that would affect the valuation?

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