Where exactly is inherited land sale taxed - my state or where the farm is?

What if the property was inherited before the stepped-up basis rule? My parents gave me land before they died, not after.

If you received the property as a gift while your parents were still alive, that's different from inheritance. With a gift, you generally take the donor's basis (what your parents originally paid plus improvements), which is called a "carryover basis." No step-up occurs. This typically results in a larger taxable gain when you sell compared to inherited property. If you received the property from your parents before 2010 or after 2010, different rules might apply due to tax law changes during that period. The year you received the gift could affect your specific situation.

Does this service actually handle multi-state issues? I'm inheriting property in three different states and trying to figure out if I need separate tax advisors in each state.

How does it work with determining the stepped-up basis? My relative passed away but we never got a formal appraisal at the time of death.

Yes, it absolutely handles multi-state situations - that's actually where it really shines. The system analyzes tax requirements across all states involved and creates a comprehensive report showing your obligations in each jurisdiction. For determining stepped-up basis without a formal appraisal, the system can help estimate the fair market value at date of death using historical property data and comparable sales. It suggests documentation to support your basis calculation and flags potential audit risks if your estimate seems off compared to market data.

Wait, how does this actually work? The IRS phone system is basically designed to keep you in an endless loop. How does some service magically get you through?

Sounds like a scam honestly. Why would I pay someone else to call the IRS for me when I could just keep trying myself? And how do you know you're actually talking to a real IRS agent?

It works by essentially navigating the IRS phone tree and waiting on hold for you. They use a combination of technology and human operators who know the optimal times to call and which options to select. When they reach an actual agent, they connect you directly to that person. I was skeptical too initially. But they don't ask for any personal tax information - they just get you connected to the IRS. You'll know it's a real agent because they'll ask you to verify your identity with information only the IRS would have on file. Plus, the call transfers directly to an official IRS phone line - you can verify the number if you're concerned.

I don't think we did any estate tax return in Nebraska. The land was appraised at around $380,000 when my uncle passed. Is that something I should be worried about now before selling? The executor of the estate was my cousin and she handled all the paperwork at the time.

At $380,000, you should be fine for Nebraska state estate tax. Nebraska actually repealed their estate tax effective January 1, 2007. And the federal estate tax exemption is much higher (over $12 million for 2023), so unless your uncle's total estate was worth more than that, no federal estate tax return would have been required either. It's good that you have that appraisal though - that $380,000 value establishes your stepped-up basis for calculating capital gains when you sell. Make sure to keep that documentation!

1031 exchanges don't work for inherited property that you're just selling without having used it as investment property yourself, right? I thought you had to have held it as investment property first.

Actually, you can do a 1031 exchange with inherited property, but there are some requirements. The property needs to be held for investment or business use, not personal use. Since this is farmland that was generating rental income or being farmed, it could qualify. However, you'd need to hold it as investment property for a reasonable period before exchanging - you can't inherit it and immediately do a 1031. The IRS looks for investment intent, not just a quick flip. Given that @abfd5713521c mentioned wanting to sell soon and having no interest in farming, a 1031 might not be the right strategy here unless they're willing to hold and rent the land first.