Q: We share ownership of 170 vacant, unimproved acres (3/4 mile on the beach), with ownership split 40 ways within our extended family. In 2012, the parcel was sold to to a land conservancy. Our portion is about 1.2 percent and was given to us in 2002 by a father. How do we determine the 2002 value of property for income tax purposes? No Realtor in the area (Santa Barbara County) seems able to help us.
Nancy
Meadow Vista, CA
A. First, you need to determine your "tax basis" for the fractional interest that you sold in 2012. That depends on whether you received the interest by gift or by inheritance. Your question says it was given to you, so we will start with the gift scenario.
If you received the interest from your father by gift, then his tax basis becomes your tax basis. So the first course of action would be to ask him, if he is available, what his tax basis was in the property. The value of the property interest in 2002 would be irrelevant other than for gift tax purposes for your father. If the gift was valued in excess of $10,000, a gift tax return, IRS Form 709, should have been filed. His tax basis should be disclosed in the gift tax return. If you can't ask your father, look for a gift tax return. Contact your father's accountant or estate planning attorney as they may have a copy.
If you received the interest by inheritance, then your basis becomes the "fair market value" as of the date of your father's death (or the value 6 months later if his estate gave rise to an estate tax liability and the alternate valuation date was elected). The fair market value of the property would be disclosed in the estate tax return, IRS Form 706. The 2002 value may not be relevant unless your father died near the time of the gift.
If you do need the 2002 fair market value, contact a real estate appraiser. For a referral, contact an estate planning attorney or accountant in the Santa Barbara area. There are a number of different appraiser designations. I suggest using someone who meets the IRS requirements to be a "qualified appraiser" as set forth IRS Form 8283, Noncash Charitable Contributions.
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