Puttng the old pocket calculator...

[kraft-t]

I bought 120 acres @ $900 plus in the late 80's. That same 120 would bring $7000 or more, Who Knows but land is selling for $7500 or more in our locality right now. Your right that 120 was paid for with after tax dollars. But the $6100 in gain has never been taxed. Not one dime. and it will be passed to the next generation for zero estate tax. Even the 15% capital gains rate would be $915 per acre. About what I paid for it.

Thus that totals to $840k of gain untaxed and I hardly think that is fair.

If the tax cuts expire they will return back to the old rate, but you are assuming that dems will not address estate taxes. They will but raise the exemption from the one million level but not as high as the $5 M per individual.

We have had a lot of good years in the past. It's just that recent years have been exceptional. The difference between good year and exceptional years. Don't forget those capital gains are over and above our ordinary income earned over those years. Plus we got to deduct all that interest money while we were paying for it.

I just think a worker making $100K would get stuck with income tax and a 15% payroll tax and some how a farmer earning a $100K in capital appreciation shouldn't be taxed on it if he dies. It doesn't even sound logical to think like that.

[GoredHusker]

It would be taxed as ordinary income assuming some type of return was seen annually from the ground.  If the ground isn't sold and income is derived from the ground, it isn't taxed as capital income.  Rather, it is taxed as ordinary income. 

[r3020]

The ground is taxed every single year you owned it. So are the building setting on it.

[BA Deere]

Don, if I had my druthers the death tax would be reserved for only the Warren Buffets of the world.  I think that the $5 million exemption, that`s in place for the moment is as fair as can be expected in this climate.  Because of the high volatility of the land market if 500 acres could be passed without tax in the past, it`s only fair that it will escape the death tax in the future as well.  As Neil Harl has said, we need uniformity in the estate tax code.  Someone that is 60 or 70 today and spends thousands of dollars needs to know that 20 yrs of planning isn`t wiped out with the stroke of a pen down the road. If the death tax reverts back permenantly to 55% above $1 million I guarantee you there will be no incentive to be productive and leaving more than a $1 million estate.  Why would you?  If you`re on your death bed with a $3 million estate, knowning your heirs would lose half of it.  Why wouldn`t you spend your last week on earth in a Vegas whorehouse blowing half of it?  Rather than your heirs blowing half of it by sending it to the whorehouse in Washington.  

[kraft-t]

Yes but the capital gains is not realized upon death. Try about $3 Million in gains at a 15% capital gains rate or try it at the ordinary income rate like most income does along with Fica taxes.

Owning a farm in inflationary times is just like having a large IRA. Gain realized without taxation until a transfer is made. Upon death ownership does change as title from the property goes from the the porevious owner to his heirs. Taxation must occur sometime on the gains. If not before death, after death.

Secondly, I would make the point that heirs do not pay inheritance taxes. They are paid by the deceased or his estate. Not by the heirs. You have no obligationn to pay your dad's inheritance taxes. Just disclaim the inheritance and you will avoid all inheritance tax obligations. Don't believe me? Try it.

Perhaps they would like it better if the bequest were subject to gift taxes.