Sell my share of family farm

[djjelm]

I inherited 1/6th of a farm from my father over 7 years ago.  I was not involved in the farming operation. We recently sold the farm land for a profit to local farmers. I would think this would be long term capital gain, but when I answer the questions from Turbo tax, I can't answer "yes" to all the questions since the land doesn't meet the narrow definition of "certain farm land".  If I answer yes, then it simply brings me to the screen to show the dates and prices which makes sense to me, but I can't technically answer yes. How do I enter this sale? 

[ColeenD3]

Where in the program are you trying to enter the sale? Are you entering it as an investment?

[djjelm]

No, under "sale of business property"

[DawnC · Accepted solution]

Only the business portion of the sale of the land should be reported on Form 4797 - Sale of Business Property.    If you used the asset 100% for this business, enter the total amounts for your share (1/6) in the Sale of Business Property section.  If you used the asset for any other purposes, you must allocate the total amount to the percentage of use for this business.

For example, if you used this asset an average of 75% for business over the course of your ownership, and you sold the asset for $1,000, you would allocate the net sales price as follows:

$1,000 X 75% = $750

Allocate your cost or basis in the same manner (1/6 of basis).

Report the non-business percentage of the property separately as the sale of "other investment or personal use property."     If you held the investment over a year, it will receive long term capital treatment.   

Where do I enter the sale of a second home, an inherited home, or land on my 2020 taxes?

• Sale of a rental property
• Sale of standing timber

You can enter this info in the investment section of TurboTax.   Select the product you’re using for the right instructions.    

TurboTax Online

TurboTax CD/Download

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You dispose of property when any of the following occurs.

• You sell property.

• You exchange property for other property.

• Your property is condemned or disposed of under threat of condemnation.

• Your property is repossessed.

• You abandon property.

• You give property away.

This publication, 544, Sales and Other Dispositions of Assets, explains the tax rules that apply when you dispose of property, including when you dispose of only a portion of certain property. It discusses the following topics.

• How to figure a gain or loss.

• Whether your gain or loss is ordinary or capital.

• How to treat your gain or loss when you dispose of business property.

• How to report a gain or loss on your tax return.

This publication also explains whether your gain is taxable or your loss is deductible.

[djjelm]

Thanks for your help