Please give me your thoughts on the following. This involves a 7-figure selling price of land. Mr. A gifted inter vivos in 1978 contiguous tax lots (2 lots) on the east end of Suffolk Cty in 1978 in equal 20% interests - one to each of his 3 children, his wife, and he retained 20% for himself. Two of his children sold their lots in 2023 of which one is my tax client. The cost basis I have been advised to use is, for discussion, $20,000 in total, $4,000 to each including Mr. A's portion.
The sale produced a gain on the sale in excess of $500,000 to each of the children/donees. Reminded of Section 1239 re: related party limits, my question to you - is there any limitation on Long Term Capital Gain or any other limitation on reporting to each of the children? I thought there may be some limitation based on the acquisition by gift. I have tried to get a copy of the deed for the original purchase, recording the transfers of title, etc. but I was advised this pre-dates the assessment department's records. I was cautioned yesterday that even visiting the department's office in Riverhead would be futile. They were relying on "Tax Stamps". I will try again on Friday, 7/27/23 by finding the S/B/Ls. Mr. A will probably be needed to be contacted to see if he has any documents on the purchase, tax map subdivision, anything that may prove helpful. Maybe even a Form 709? I appreciate any thoughts on this matter and I will check any references. My main concern is whether Long Term Capital Gain reporting is allowed for the transaction. Thank you all very much.
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Andrew Demsky
Andrew C. Demsky, CPA
North Bellmore NY
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