Owned vacant land for 22 yrs., sold, made 15k profit. Do I add that to our joint filing of our regular income of 60k and also have to pay more in capital gains?

[homesteader]

Property was put in my name 22 years ago by my father.  I don't understand if I have to add it as regular income and then pay capital gains taxes on it.  I was told that I would not add it to our income, and would not owe any capital gains taxes either.  That didn't make sense to me since I made a profit of 15k.

[MichaelDC]

No. This is taxable, but will only be reported as Long-Term Capital Gains when you follow the instructions below.

First a couple of items to keep clear when entering this transaction:

If the land was given to you by your father as a gift, your basis for figuring a gain is the same as the donor's adjusted basis. (This would basically be what your father paid for it.)

If you inherited the land, your basis would be the Fair Market Value of the land on the day you inherited the property (date of death).

Example: if your basis is $50,000 on a $65,000 sale price, you would have a $15,000 long-term capital gain. Note to add any Sales Expense (realtor commissions, etc) to your basis when you report this.

If you have additional questions or details regarding this, please feel free to post in the comments for further clarification.

Sale of land gets reported in TurboTax as a sale of an investment.

Please follow the following steps to record the sale in TurboTax:

• Within your return, select Federal tab
• Select Wages & Income tab
• On "Your income" page, click Start button for Stocks, Mutual Funds, Bonds, Other
• On "Did you sell any investments in 2017?", click on Yes button
• On next page, answer whether or not you received a 1099-B or a brokerage statement for the sale (Probably NO)
  
• On next page, "Choose the type of investment you sold", select radio button for Land and click on Continue button (See the attached screenshot below. Click to enlarge.)
  
• Enter the details of your land sale on the next page, "Enter Land Sale Information" and click on Continue buttton
• On next page, select radio button for the way in which you acquired the land and click on Continue button
• On next page, "Any Business or Rental Use?", indicate how you used the land and click on Continue button
• On next page, "Enter Cost Information", enter Date Acquired and Original Cost and click on Continue button
• TurboTax will then calculate your gain on the investment in land, indicate whether it's short- or long-term, and indicate your Proceeds and Cost Basis
• You can proceed further and add any additional similar investment sales in like fashion

[homesteader]

My father had complete control of it  until he died.  I don't know whether to call it a gift or if I inherited it.  I'm totally confused about it.

[MichaelDC]

That's understandable. We'll get it sorted out. Sounds like an inheritance if your father retained control. If that's the case, you'll use the Fair Market Value of the property on the date of your father's death as the Purchase Price. Do you have a deed that shows when you assumed ownership?

[homesteader]

Yes, I have a copy of it.  Do I put the 15k profit on line 13 of income tax form 1040 .  I understand that this profit is after I have taken the cost basis, etc. from the sale.  I just need to know if I include the 15k as regular income on form 1040.  I have already figured out everything on form 8949 and schedule d.

[MichaelDC]

Great. No. Take it step by step in the original answer from "Please follow...." Do NOT put it anywhere else. All will be taken care of with that. Hope this helps. You're almost there.