Question

Brody and tanya recently sold some land they owned for $150,000. they received the land five years ago as a wedding gift from brody's aunt jeanette. she had already given them cash equal to the annual exclusion during that year. aunt jeanette purchased the land many years ago when the property was worth $20,000. at the time of the gift, the property was worth $100,000 and aunt jeanette paid $47,000 in gift tax. what is the long term capital gain on the sale of the property

Answer 1

Hello there!

Your question asks what would be the long term capital gain from the sale of the property (the land).

Answer: $92,400

To solve this, we would need to use the given information from the question.

Key information:

Sold for $150,000

Property was worth $20,000

At the time of the gift, property was worth $100,000

Aunt paid $47,000 in gift tax

With the information above, we can find the answer to the problem.

What we need to do is get the formal property value (20,000) and add it with the gift tax (47,000) times the profit made off of the property (80,000) and divide it by the property value when gifted (100,000).

Then, we would subtract the selling price for the land (150,000) by the land tax (57,600).

$20,000 + (47,000 *80,000/100,000) = 57, 600\\\\150,000 - 57,600 = 92,400$

When you're done solving, you should get 92,400.

This means that the long term capital gain for the property would be $92,400.

I hope this helps!

Best regards, MasterInvestor