DANRVAN

If that is the case, you are not filing an accurate and complete tax return. You might also miss out on deductions for depreciation and items held as inventory on DOD as a result of stepped up basis. Also incorrect reporting of SE income.

It sound like your numbers are correct. When an exchange involves multiple properties you report it on a single form 8824. (see instructions). You leave lines 12-18 blank and attach a worksheet to show how you arrived at those individual amounts and the net is reported on lines 19-25. An excel spreadsheet works great when multiple properties are involved.

Although there are articles such as 3rd link above posted by bbstacker that suggest the surviving spouse in you situation is entitled to capital gains treatment, I do not see the authority that allows it. Reference is given to 1223(9) which refers to the holding period of inherited property but does not mention character of the income. Although it is clear that capital gains treatment is allowed in cases where the crop is sold along with land, that is not the situation here. In your situation, it appears wife is continuing the operation and is in the business of raising and selling crops. I think there is a strong case that the IRS would include the sale on her Schedule F, offset by the stepped up basis at date of death. However, I do not have an authoritative reference to back that up. If on the other hand surviving spouse was to discontinue the operation by lease or sell of the land I believe there would be a case for capital gains treatment. The term estate has different meaning, but in this case I believe the term applies to the assets and liabilities of the deceased and the distribution to heirs, which passed to surviving spouse. Something else to keep in mind is that supplies ( seed.fertilizer, fuel etc) purchased and held as inventory on date of death also get a stepped up basis and are deductible by surviving spouse if used in the farming operation and also deducted on the final Schedule F of husband. See Backemeyer vs com.

That should read "GST exemption" in both sentences.

It should be reported on part 3 since a trust that has both skip and non-skip beni's is considered an indirect skip as defined in sect 2632(c). In regards to the 2632(c) election, that would cause a taxable termination on the death of the trust beni. There are cases where the 2632(C) election is made out of the auto allocation of GST. For example if the life insurance policy expires while in trust there is a possible of waste of GST. That might not be a concern depending on the size of the estate. The estate attorney should be consulted if there is a concern.

I have worked with small landowners and ranchers with occasional timber sales. In these cases, I have taken the position that the taxpayer is not in the business of raising and harvesting timber and have reported on Schedule D. I find it odd the basis equals sales, unless the land was recently inherited. I have seen cases where tax preparers pull a number out of the hat to determine basis. It can be tricky but using timber growth rates, and historical market prices a reasonable estimate is possible. When dealing with timber keep in mind the $10,000 above line deduction for reforestation cost.

To clarify, the non recaptured portion of the gain would show as LT capital gain. I would also note in the description that the asset was inherited.

Right. But even though act has stalled out, it shows congress is aware of the oversight which allows two deductions for the same transaction. It might someday become law and amended returns might be in order for those who choose to take them both.

You can force it to part III of 4797 on the input tab. Then it should flow to Schedule D as long term.

Curious how they got zero basis. As LION and Max pointed out your answer will depend on the type of trust.

Max, as I understand it, the QTIP will move the assets from the estate of the decedent to that of surviving spouse. However, I don't know if reg 1.121-1(c)(3)(i) will apply since the house was not owned by a grantor's trust at the time of sale, maybe an attorney can help. I hope your client appreciates the digging and scratching you are doing for them.

So as long as you are using the fmv on date of death as basis for estate and showing as long term gain then you should be okay.

Are you asking how to report the sale of the assets by the estate? If they were used in a business of the estate they would go on 4797, otherwise report as sale of capital asset. The estate gets a stepped up basis which is the FMV at date of death, if that is what you are asking.

You do not show a sell of assets on the 1040 of the deceased. Assets go to estate at stepped up basis. Hope this helps.

The discussion draft of the "Tax Technical and Clerical Corrections Act" released in January contains a provision that eliminates a duel deduction for both DPAD and 199A.

The only trust eligible for the exclusion is a grantor trust. see reg 1.121-1(c)(3)(i) I believe it would have been allowed under a provision of the EGTRRA of 2001, but that was subject to sunset.

That should be 1.1366-2(b)(2)

The ordinary loss c/f will offset ordinary income next year. When assets are sold ordinary gain will be recognized up to the amount of depreciation taken. You are talking about selling assets vs stock?

It is not clear what your are asking. Are you talking about final sale of partnership assets?

Only to the extent of basis. Otherwise permanently disallowed since the share holder was never at risk for the amount. See reg 1.1336-2(b)(2).

Was that disallowed by the IRS? If ultimately there was no tax benefit then I would not report on 4797.

Oregon is very generous. Oregon residents living in a foreign country may be taxed as foreign nonresidents if they meet the “physical presence” test or the “bona fide residence” test. In which case their foreign income is not taxed by Oregon.

As Catherine and Gail mentioned be sure to get advise on state taxes, some preparers of federal foreign taxes are not familiar with individual state taxes.

The estate attorney should have taken care of funding the bypass trust (B trust). It may not be to late. I was recently involved in an estate where it took three years from date of death to close the estate and fund the bypass trust. The funding date goes back to date of death. If not funded, the purpose of the bypass trust is defeated. The bypass trust gets stepped up basis on date of first spouse to die. If it was never funded you need to talk to estate attorney. There is 2 year window to make the election. The B trust is not a Qualified Revocable Trust so the election does no apply. Hope this helps.

Yes, the year end for estate is May 31, 2019, due date 9/15/19. That depends. If there is both an estate and trust then EIN for both. If there is no estate and you are electing to file the QRT as an estate then use EIN for the trust obtained after DOD.