One-sixth of $3,000,000 Gift

One-sixth of $3,000,000 Gift

Expecting to receive 1/6th of the proceeds from the sale of a highly valuable rental property in State X, I want to know if capital gains taxes will come out of my portion and if I will have to pay a gift tax. Thank you.


If the property is an inheritance its tax basis should have been stepped up to fair value at the death of the testator so that there might not be any tax. If the property were given to you (i.e., your 1/6th interest) then your tax basis is the tax basis (cost, less depreciation, plus improvements) is the same as the donor (the person who gave it to you). If the sales proceeds are more, then you have gain. If the deal is a partnership/LLC (even if owned as tenants in common a partnership return may be used) you should get a form K-1 reporting your share of the gain and classifying it. If not be sure to get comparable information from whoever is handling the books and records. As for capital gains, get an accountant (someone should have done this before the sale) and discuss the tax consequences. If it is rental property, is there depreciation recapture? Is there land that was not depreciated? Is there personal assets that were previously depreciated? Ask your CPA to review it all.

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