I inherited some land in NE and sold it to my brother

[kearea]

I inherited 80 acres of land in NE and sold it to my brother. Closing at the end of February. The money I received, I put into an annuity with Mutual of Omaha and set it up so that I would receive $3000 a month as income, as I retired last year, and the money supplemented our Social Security payments. How do I report this? In the past I did our taxes at home, but this year, it might be more complicated. Should I have an expert do them? I also have small HYSAs for emergency expenses, and I duly report all interest payments
80 acres at $8000 an acre - I put 600,000 in the annuity and the rest in a HYSA for easy access. I do not have ny interest 1099s yet, and hope to receive them soon.

[DaveF1006 · Accepted solution]

It depends. Mutual of Omaha will send you a 1099R that reports the annuity you are earning from the sale. In addition, the bank that services your HYSA will send you a 1099 INT that reports the interest earned during the year to report on your 2025 tax return. 

You do need to report the sale of the property. Here are the considerations for reporting.

1. Since you sold the land in 2025, you must report this on your 2025 federal tax return (due in April 2026). Step-Up in Basis: This is your best friend. When you inherit property, your "cost basis" (the value for tax purposes) is usually the Fair Market Value (FMV) at the time of the owner's death, not what they originally paid for it.
2. If the land was worth approximately $8,000 an acre when you inherited it, and you sold it to your brother for $8,000 an acre, your taxable gain is $0.
3. You report this on Form 8949 and Schedule D. Even if the gain is zero, you must report the sale to the IRS to show why you don't owe taxes on that $640,000. 

You may consider the services of a tax expert if your tax expertise may be lacking especially with the sale of the property. Turbo Tax employs "Live agents' that perform this task. Here are some links you can select to get started with this process. Here is a link to the Turbo Tax website. 

How do i get Turbo Tax Experts

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[kearea]

My brother told me that land in his area is averaging around $10,000 an acre. We agreed on $8000 because "family". Should I record the $10,000 amount? It is a guess because my mother rented the land to my brother for years before her passing, so we don't have a specific appraisal. Should I get one?

[kearea]

To expand on my reply, whatever the appraisal is, it will be more than the amount we settled on. How specific do we need to be if the end result will be 0 gain?

[DaveF1006]

Yes, you would report the official valuation amount as the basis for the property as this is the official valuation given by the appraisers. There still is no gain on the sale of the property but the report of the sale is accurate, which is what is important.