Solution-Average annual gross rentals

Average annual gross rentals

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Reference no: EM131044539

A father and son have been farming land owned by the father for the past 12 years. Just prior to his death, the father was offered $900,000 for his farm because of its possible use as a shopping center. The son would like to continue to farm the land if it can be included in his father's estate at its current use value. Additional facts are:

1. Average annual gross rentals from nearby farms of similar acreage are $36,000.

2. Average annual state and local real estate taxes on the farm are $4,000.

3. The interest rate for loans from the Federal Land Bank is 8 percent.

For federal estate tax purposes, the farm method valuation formula would result in a current use value for the farm of

A. $600,000

B. $300,000

C. $500,000

D. $400,000

Reference no: EM131044539

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Average annual gross rentals

Reference no: EM131044539

Reference no: EM131044539

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