Q: My father deeded his farm to me and my brother a month before his death.. He made a will at same time giving us everythi
His wife fought will and deed.. We settled with her for $35,000. How do I figure cost basis of property for tax purposes. Was is gifted, bequested or purchased?
A:
It's going to depend on the language in the settlement. That will determine when the property passed, whether as a gift or as part of the estate. If the settlement did not address the issue then I would think the gift would stand as completed and carryover basis would apply. It would be beneficial for the property to have passed through the Probate estate as it would receive a step up in basis.
I would suggest professional help because the difference between getting stepped up basis or not will be significant.
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