Unfortunately, you will likely owe some tax on the sale. If there was a primary residence involved in the sale, the gain related to the sale of the primary residence can be excluded from capital gain (up to 250,000 dollars or 500,000 dollars for taxpayers filing a joint income tax return.
However, the portion of the sale related to farm is taxable. Unfortunately, the section 1031 exchange would have been an ideal transaction in that you rolled the profits into a new farming operation. However, if the money from the sale was paid to you directly, the sale will not qualify for section 1031 exchange treatment.
