Discussion:Selling Development rights of a farm to the town

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Discussion Forum Index --> Tax Questions --> Selling Development rights of a farm to the town


Hansenbt (talk|edits) said:

7 January 2007
Would selling the development rights for a farm to the town be a taxable event?

It it is a taxable event, Would the amount received from the town for the development rights be subtracted from the basis of the land and once the basis went to zero the balance would be taxable?

Or can you reduce the basis of the land & buildings by the amount received from the town?

Deback (talk|edits) said:

January 7, 2007
Read Publication 225, starting on page 11 under Cost-Sharing Exclusion, to see if this farm qualifies for the exclusion.

Taxman 55 (talk|edits) said:

7 January 2007
The cost-sharing exclusion generally applies to excluding reimbursements or payments for some type of conservation practice implementation. I would think that the sale of development rights would be handled much the same way as an easement payment; reducing the basis until zero and then taxable. I wouldn't think you could reduce the basis of the buildings though, only the land.

Deback (talk|edits) said:

January 7, 2007
You're right, Taxman. Page 17 of Publication 225 shows how to treat easements and rights-of-way. I knew I was answering that question too fast and looking for the wrong keyword. Thanks.

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