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Level 2

Question

Cost Basis

4 replies
18 views

Inherited property; Assessed value $161,000. Donated conservation easement 12 years later; assessed value before donation was $200,000.00; after donation: $110,000.00. What do I show for cost basis on Form 8283, line 5(f)? Also for Schedule D if I sell property?

Level 10

The basis of the property would be the Inherited basis reduced by the percentage of the square footage donated times the inherited basis of the property.

Inherited Basis - (Sq. Footage % of donated property x Inherited basis)

Level 2

I didn't donate the property, only a conservation easement. Assessed value after donation is $110,000.00. Does that become my adjusted cost basis?

Level 10

The assessed value of the property is not your new adjusted basis. This example could help explain the process.

Inherited Property Assessed Value at the time it was inherited - $161,000

Total square footage of the Property - 3,500

Square footage of donated easement - 1,050.

New adjusted basis after the donation:

Square footage of donation / total square footage = Percentage donated:

1,050 / 3,500 = 30%

Percentage donated x Inherited basis = basis of donated easement

30% x $161,000 = $48,300

Original basis of your property - Basis of donated easement = New adjusted basis of your property

$161,000 - $48,300 = $112,700