Tax Advantages for Selling Farmland Held in Trust - Best Options?

Thanks for the helpful info. Would a 1031 exchange still work if I'm only a partial owner through the trust? And does the replacement property need to be farmland or can it be any real estate?

Yes, a 1031 exchange can still work with partial ownership interests, though it adds complexity. You'll need to coordinate with the other trust beneficiaries since the exchange typically needs to happen at the trust level if that's where the ownership resides. The replacement property doesn't need to be farmland specifically. Any qualifying "like-kind" real estate held for investment or business purposes would work - this includes commercial property, rental homes, apartment buildings, vacant land, etc. Just keep in mind the replacement property must be of equal or greater value to fully defer the taxes.

This sounds interesting, but I'm skeptical. How exactly does an AI system help with trust tax issues? Does it have actual tax attorneys reviewing the information or is it just automated?

Did you need to upload all your trust documents? I'm always nervous about putting financial info online.

The system uses tax professionals who review the AI analysis, so you get both the efficiency of automation and the confidence of human expertise. The AI part identifies potential issues and opportunities based on your documents, then tax pros verify everything before you get the final advice. Yes, you do need to upload relevant documents, but they use bank-level encryption and don't store your docs permanently after analysis. I was hesitant too, but my accountant actually recommended it, and the security certifications gave me enough confidence to try it.

How does this actually work? The IRS just calls you back? Seems too good to be true.

I don't believe this would work. The IRS doesn't give priority to people using third-party services. Sounds like a scam to me.

It's not that they give you priority - they simply hold your place in the phone queue so you don't have to. The service connects to the IRS, navigates the phone tree, waits on hold (sometimes for hours), and then when an agent finally answers, they connect you. It's like having someone wait in a physical line for you. I was skeptical too, but it's completely legitimate. The IRS has no idea you're using a service - they just think you've been waiting on hold the whole time. You're getting the exact same place in line you would have gotten anyway, but without having to listen to hold music for hours.

That's an interesting point about IRC 2032A. My family has owned the land for about 40 years but we've been leasing it to actual farmers for the last 20 years. Would that still qualify? And how exactly would spreading the sale work - you mean selling portions in different tax years?

For 2032A qualification, leasing to farmers might complicate things since there's a material participation requirement. You'll need to check if your lease arrangement meets the special use requirements - sometimes land leased to family members for farming still qualifies, but it depends on your specific situation. Regarding spreading the sale, yes, I mean structuring the transaction to occur across multiple tax years. This could be done through an installment sale where you receive payments over time. This spreads the income and potentially keeps you in lower tax brackets each year rather than having one large capital gain that might push you into higher brackets in a single year.

DSTs can work with 1031 exchanges regardless of how the original property was held, as long as you're following the proper exchange rules. The key is that you maintain the same beneficial ownership interest. The advantage is you can get fractional ownership in much larger properties with professional management. I did this last year when selling my trust's commercial property and it's been working well - monthly income without any management headaches.

This CRT approach is really intriguing! I hadn't considered the philanthropic angle, but my family has always supported agricultural education programs. A few questions: What happens if the farmland doesn't sell quickly after it goes into the CRT? And can you choose which charities benefit, or does it have to be decided upfront? Also, roughly what kind of immediate tax deduction are we talking about for something like this - is it a percentage of the property value?

Great questions! With a CRT, the property typically needs to be sold within a reasonable timeframe (usually within the first year or two) since the trust needs to generate income to make the required distributions to you. If it doesn't sell quickly, the CRT can borrow against the property or you might need to contribute other assets temporarily. You have complete flexibility in choosing the charitable beneficiaries - you can name specific organizations upfront or retain the right to change them later. Many people start with a donor-advised fund as the remainder beneficiary, which gives them ongoing control over where the money ultimately goes. The immediate tax deduction depends on several factors: your age, the payout rate you choose, current IRS discount rates, and the property value. For farmland worth $1M with a 6% payout rate, someone age 60 might get a deduction around $400K-500K, but you'd need specific calculations based on your situation. The older you are when you create the CRT, the larger the deduction since the remainder value to charity is considered more certain.