The property is farmland and home of wife's parents since 1941. Property was gifted to children in 1986.
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When someone gives you a gift, your cost basis is the Lower of Fair Market Value or the cost of the donor.
Farmland was certainly worth less money in 1941 so it would be the cost they paid for it in 1941.
You would have to do some research perhaps with the local county where the land is located to see if you can get a value.
Absence a value you would have to use $0 and you don't want to do that.
It does however regardless of value qualify for Long Term Capital gain treatment which is more favorable.
When someone gives you a gift, your cost basis is the Lower of Fair Market Value or the cost of the donor.
Farmland was certainly worth less money in 1941 so it would be the cost they paid for it in 1941.
You would have to do some research perhaps with the local county where the land is located to see if you can get a value.
Absence a value you would have to use $0 and you don't want to do that.
It does however regardless of value qualify for Long Term Capital gain treatment which is more favorable.
If you receive property as a gift from someone who is still living, then your basis (or if value at time of gift was lower then their cost, that is what basis you receive) carries over from him to you. Since the land was gifted you will have to recreate their cost basis, and in order to do that we need to know how they acquired the property.
If they bought the property, then there is your starting point. You are going to need to find a way to figure out what he paid for it. You can research the property records at the courthouse and see if the sale was recorded.
Since it's farmland there may be few, if any improvements that would have impacted the basis. Possibly again, there may have been filing by the held at the local courthouse that you may be able to obtain.
It is a difficult process and your starting place and most help will be local town offices.
I wish you the best of luck.
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