Taking another look at this, why do you think that you should not pay tax on the gain from selling the land? Are you thinking that you should not pay tax on the gain because the $87,000 selling price is below the $94,050 top of the 0% bracket for long-term capital gain (for 2024, married filing jointly)? That bracket boundary applies to your total taxable income -- all of your income, not just the capital gain. But it applies to taxable income, not total income or Adjusted Gross Income (AGI). Taxable income is Form 1040 line 15.
To determine the tax bracket for long-term capital gain, the long-term capital gain is "stacked" on top of your taxable ordinary income. The gain is not necessarily all taxed at the same rate. For example, if you have $90,000 of ordinary taxable income, that "uses up" $90,000 of the 0% bracket for long-term capital gain. So $4,050 of your long-term capital gain would be taxed at 0%. Any additional long-term capital gain would be taxed at 15%.
If your MAGI is over $250,000 (for married filing jointly), the capital gain may also be subject to Net Investment Income Tax. MAGI for the Net Investment Income Tax is AGI plus excluded foreign income. (If you did not claim the foreign earned income exclusion, MAGI is equal to AGI.) The Net Investment Income Tax is 3.8% of the lesser of net investment income or the amount by which MAGI exceeds $250,000.
