@bkaps I am not sure I am following you on the actual scenario -- what I get is that:
(a) the seller/father bought the prop for $75,000 ( when and how was the prop. used all these years ? )
(b) The owner is selling the prop. to son for $300,000. Should we assume that this is "at arm's length " or what ? Is this FMV ?
(c) If one assumes that this is "at arms length " transaction , then the gain for the seller is :
Sales Price ( $300,000 ) LESS any sales expenses including commission . transfer taxes etc.) LESS adjusted basis.
Adjusted Basis = (Acquisition Cost + Cost of improvements over the ownership period) LESS Accumulated allowable Depreciation ( whether recognized or not )..
(d) Given the above and based on the facts that you have shared, there will be both Capital and ordinary gain for the seller.
(e) Please also note that because this is a transaction between related parties, even if at arms length, there are a few restrictions on the buyer ( if he/she were to dispose off the asset.).
Is there more I can do for you ?
Please note that " my client" and use of TubroTax for preparing such tax return(s) raises red flags. Please see TurboTax usage restrictions/license .
