Transferring Farm Assets or Retiring From Farming: Tax Tips When You’re Gifting or Inheriting

Editors Note: This is Part Two on the ins and outs of U.S. Tax Law when passing on your farm and assets. Part One covered what happens when you sell them.  Gifting If you are giving a farm asset as a gift, the receiver gets the asset as well as the tax basis (the amount of money something is worth after depreciation). Usually in farm situations there is no tax due from the donor or from the receiver of the gift. Not only that, but the person receiving can continue to depreciate the gift if it is used in a business. Federal tax law allows everybody to give up to $14,000 per person per year in cash or assets to as many people as they wish with no tax due for either the giver or the receiver. If you're giving to a spouse, there is no limit. But if you give over $14,000 per year to someone other than your spouse, you will start lowering something called your "Unified Tax Credit" which will talk more about later. Most people think that $14,000 is a lot of money. But it isn't so much for someone who has been collecting assets for decades. So let's say you want to increase the amount you give to your daughter and her significant other. So you give $14,000 to each of them, and then your spouse gives $14,000 to each. That's a total of $56,000 you've given away without any tax ramifications. The trick is to have a plan if you are considering making these kinds of sizable gifts over a number of years. The plan can help you give away things in a certain order to ensure tha

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