Some of y'all should bid

[Buckrub]

Found out that the land across the road from the farm, and the small plot next to it (across a wooded ditch) are for sale. Well.......... turns out that they are tiny parcels that are part of a big sale going to auction.........tomorrow, Feb 24.

There are 3 parcels, including Arkansas' premier duck lodge. Inside each parcel are smaller parcels. It's being sold because the two owners and his sister can't get along!!! The following article explains it, but the price is now expected to be north of $75 MILLION........ much of it is tillable farm land, a lot of prime greenhead duck woods, and the lodge.

http://www.arkansasbusiness.com/article/103287/sibling-dispute-leads-to-sale-of-farm-hunting-land-in-delta?page=all

Weird, but here's how the auction works. I don't know how many total parcels there are, but a lot. Let's say 50 for discussion. If you bid on parcel #29, and win..........and 30 other guys win the other parcels.......then at the end, there is one more auction. At the end, there will be a chance for any ONE person to bid on the entire thing, and if his bid equals more than the total of all 30 of those guys' bid, they're out in the cold and he gets it.

Why is it being done that way? Because Mr. Dunklin (who owns that property next to the farm) already owns outright about half of it, and he wants it all. His sister doesn't want him to have any. But he thinks with his already 1/2 ownership, that he has enough money to buy up the other half and be sole owner. I sorta hope he wins.

In another post, I asked Bwana if a picture looked like North Dakota. That was taken out the front door of the farm. But the field in the picture is that parcel that's being sold.

Some of y'all can afford this.........y'all ought to bid and you can be my neighbor!!

[Big Muddy]

I guess you were down at the farm, working on that air compressor, when I posted this a few weeks ago. ;)




http://www.goodhunting.info/showthread.php?6176-Hey-Bucky-you-heard-about-this

[Buckrub]

Yes, Ed, I was. I didn't see that. Sorry to be duplicating.

I do worry about our little farm down the road. It works fine with my wife and her uncle. No disputes at all. But he has 4 kids and I have 3. There's not enough income to go around for 7 folks, so some of them will want to sell.

We're headed to a lawyer as soon as I can scrape funds together to try and figure out how to best leave this to kids.

As to that land, the 5 Oaks Duck Lodge is on Bayou Meto.........the prime duck spot on Earth. (Heck, you oughtta read about how AGFC is trying to figure out how to regulate usage of that public duck spot.......it's a mess!!!).

Our lessor was standing out by the farm pole barn when we were there. I headed to town and stopped and said hi. He was talking to a couple of guys. Found out later they were a guy that flew a private jet in from ???? to Stuttgart, just to come look at this land. He was going to bid on the whole thing. I wondered if it was you, that's why I stopped to check!!! :) But Lessor said there are a TON of people with enough money to bid this thing way up, and interested.

Gonna be fun to watch.

P.S.
The field in the ND post I made had so many geese on it one day that they woke me up, and made hearing the TV hard. Not kidding. And it had just been scraped, nothing on it!!!

[Big Muddy]

I know two guys that are gonna bid on some of the land.....however, they are, each, only worth about $20 million, so they'll prolly get out-bid, and hafta settle for some of the land across from your farmhouse. ;)


BTW, geese ain't ducks....anybody and everybody has geese, down here....h3ll, they hafta shoooo them off the Walmart parking lot....those big-money-guys want greenheads!!!....anything less is just trash to them.

[Buckrub]

Is one of those two, you? :)

Amen to that! Sky carp and field rats are just that. DUCKS have greenheads. But I gave all that up............nowhere private to go, and too old to do it like we used to on public ground. And can't afford guided deals.

As for bidding, the whole deal is weird. You can win a bid.........and then you have to sit around and wait to see if George, or someone, outbids you on the entire package.

The parcel that's around me is about........um.........200+ acres maybe. Maybe a bit more. Don't know their boundaries.

[Big Muddy]

There's nothing weird about that auction bidding process, at all....it's done all the time, like that....actually, it's smart on the auction company's part, to do it that way....think about it....it brings another dimension into the bidding process, and places more and bigger question marks in both the minds of the parcel bidders, as well as the package bidders....they both are trying to figure out what the other is going to do.

That happens because the parcel bidders are willing to bid a higher per-acre price(less total investment), which in turn, runs up the per-acre price on the package deal....a package deal would normally be at a discounted price because one buyer is taking it all....in this case, the package bidder isn't necessarily gonna get a discounted deal because he's gotta match or beat the higher per-acre parcel bids on the entire package.

Sorta confusing, but it's similar to you listing 25 of the same items on ebay, with a "buy it now price" or a "reserve price".

[BarryBobPosthole]

UH OH!


BKB

[Buckrub]

Hmm. OK. I don't know squat about auctions.

I know,........or was told.........that Mr. Dunklin wants it done that way so that it will placate his b**** sister by appearing to split it all up and get them both out of the farm.......she wants more than anything for him to NOT own any of it.........but still allowing him to have a GOOD chance to hear all the bids and then have a chance to bid for it all. SHE can't bid for it all, she doesn't have $75Million. He owns half already, so would only have to physically buy the other half, and he DOES have a Bazillion.

I guess that means that he set this up this way so he has a chance to own it all and be rid of sister at same time. But maybe auction company (Blackmon) suggested it, I don't know.

This is a world above mine. I just observe from below.

I have no clue what Posthole's going on about. ????

[Big Muddy]

True dat....she and he own "equal undivided interests"....that's the way their parent(s) willed it to them....absolutely the dumbest and most dangerous thing a testate individual(s) can do to their heirs....even the nicest and most agreeable people can become vile and deceitful, when they suddenly become heirs under those conditions....sheeit like that has gotten heirs so irate that they have killed over it....I once saw a family brawl at a funeral.

She wants to sell and get the money, and he wants to keep the property intact....they couldn't agree, so they had to let a judge decide, and he decided the provisions of the sale.

My personal opinion is Mr. Dunklin will pool his and his friend's resources, and buy it ALL....from what I've heard, he seems to be conservation-minded, and wants to keep the family land intact....if so, I wish him the best.

[Buckrub]

Well, hmmm. Interesting.

I"m interested only cause that's our arrangement. I agree, it's not smart but sometimes hard to break up a farm. In this case, it's small, and only a few wells. They irrigate the whole thing in a patchwork that would make it real hard to divide up 1/2 and 1/2 and not leave someone screwed by not having a well........which are $30K to put in!!

Also, it was set up as a "trust" originally. There were aspects of the trust that weren't palatable to Jeannie's Mother (now gone) and Uncle (still around), who were recipients of the farm. Such things as excessive bank fees, unneeded fees, things that a tiny farm didn't need to bother with and which could be done by those two more easily, and cheaply. So they simply ignored the trust!!! They ran it as an undivided halves. When she died, we had to go to court to get the trust revoked and legally run the way it had been run for years, anyway.

In our case, it actually works. But we're talking 500 acres, not $75 million dollars worth of stuff!!! Our problem is that out of the next generation, SOMEONE will want to sell, so it'll be a microcosm of Mr. Dunklin's dilemma. My son will never ever want to sell. One of my daughters might, one probably won't. On the other side, one of the four won't want to, and a couple will. THEY will have a mess.........not us.

But still, I see no way to equitably divide the land in 'fee simple' without cash passing hands, and neither party has any.

[Big Muddy]

It CAN be done, Bucky, but will usually require advice from a financial planner.

[Buckrub]

Sure. But again, that's cash.

More than the cash.........or the effort........you'd have to get both sides to agree to discuss it....and that ain't happening here. SO, The End.

Still, I agree with everything you've said. But remember........I'm not the owner. I'm just the Secretary/Treasurer/Repair guy in this outfit.

[Big Muddy]

Been there, done that....it's a thankless job, too....I feel for ya, buddy.

BTW, has ya'lls land been appraised, since your m-i-l's death???....that will establish your land's cost basis, and prolly save ya'll a butt-load of tax money, if you do decide to sell it, down the road.

[Buckrub]

I'd sell it if Mama dies. No way before that.

No.....it hasn't. BUT, we did have to go through a mess (due to an incompetent old lawyer) with the county tax office to get it all in Jeannie's name. However, we did sell 11 acres to the Lessor (which is Jeannie's cousin's boy) and he's about finished building his new house on it. And we had to do that for that parcel.........

[Big Muddy]

Establishing a cost-basis for the land has nothing to do with your local tax office....I'll explain it, if you like, but if not, I'll just let it go.

[Buckrub]

I have a vague understanding. We had to do it for selling that 11 acres. But no.....it's NOT been done for the whole farm.....and I think the prevailing attitude among the owners (:)) is "Why do that? We aren't ever selling"...... but no, I don't understand it anywhere near like you do.

Again.......I'm NOT the decision maker. I'm an Advisor.

And deer hunter.

And garage cleaner.

[Big Muddy]

Believe me, you WILL want to understand it, completely, when and if ya'll ever decide to sell it or even pass it down....because ya'll and/or your heirs could be in deep tax sheeit, without a land cost-basis....paying for an appraisal, now, which more than likely will only costs a few hundred bucks, will pale in comparison to your tax liability....I don't know ya'lls situation, but I CAN tell you need to check it out, buddy....jmho

[Buckrub]

I believe you.

But why weren't Jeannie and I in 'deep tax crap' when it was passed to us.......or her? What's the difference?

[Buckrub]

Thinking about this, I guess it's cause the land wasn't sold.......I guess that's when cost basis comes into play.

It'll not be sold as long as wife, and probably me, are alive. Not sure how to ensure that stays that way..........after we're gone.

[Captain]

Thinking about this, I guess it's cause the land wasn't sold.......I guess that's when cost basis comes into play. It'll not be sold as long as wife, and probably me, are alive. Not sure how to ensure that stays that way..........after we're gone. You can't.
The longer its held in family the more the capital gains will be on the sale. In this state anyway. I don't pretend to know about yours.
Didn't you say it was in trust?
Do you know if it's per stripes or per capita?

[Chicken Dinner]

If the estate was large enough, and I would think a 509 acre farm would be, the FMV would have been established for estate tax purposes already. That'd be the tax basis for those who inherited it.

[Captain]

Is that not only true if it's sold as farm land? Say if a developer came in and wanted to pay way more than farm land prices and subdivide the tract and put houses in it would they not be subject to much more tax? And even several years back tax ?

[Buckrub]

Capital gains would increase, assuming inflationary price for the land, I assume. I guess that's a fair assumption........just not sure. $2K an acre is about it, as far back as I have any (scant) knowledge.

The odds of this place being sold for development is almost non existent. We can't even get a cell tower in miles. This is a state with less than 3M people, and this is the poorest 1/4 of the state. I'd guess this is not an issue, but of course, anything could happen.

There was no estate tax. There is a CPA involved, same one for many years, going back to FIL and MIL. There was a lawyer involved, but he's gone.........

Past that, there are folks here that are a zillion times more knowledgeable about all this than I am. I haven't paid any estate tax, or other taxes, and the land isn't going to be sold. There WAS a trust..........but we broke it and left it as Undivided Halves. It wasn't being honored anyway, and the sole purpose of the trust, to ensure the land wasn't broken up or sold, has been honored.

That's about all I know. I'm open to any info I haven't thought of.......which sounds like it's a LOT!!

[Chicken Dinner]

Dang, $2k per acre just reminds me again that I live in the wrong area. Regardless of whether the estate owed any tax, the tax basis should have stepped up to FMV when your MIL passed. To Eddie's point, knowing what that is/was could save you some tax down the road if you do ever sell.

[Big Muddy]

If the estate was large enough, and I would think a 509 acre farm would be, the FMV would have been established for estate tax purposes already. That'd be the tax basis for those who inherited it.

Chick, that is not entirely correct....the cost-basis must be established, usually by a certified appraisal, at a time AFTER the owner's death, and the land is passed to the heirs....the heirs, certainly, do NOT have to pay any estate taxes on it UNTIL they decide to sell the land....fmv and cost-basis are NOT the same thing, in this case....fmv can be figured at ANY time....in this case, cost-basis only comes into play, at a time AFTER the owner dies, and the land is passed on to heirs....but, is of consequence, ONLY if the heirs decide to sell.

If it hasn't been established, by an appraisal, then the cost-basis will revert to the price that the original family member/owner of the land paid for it.

So, let's say Jeannie's dad paid $500 per acre, many years ago, and she sells it for $2,500 per acre, she will pay taxes on the $2,000 per acre profit, if her cost-basis has NOT been established.

However, if an appraisal is performed, pretty soon after her Mom's death, this will establish the cost-basis for Jeannie....suppose that appraisal yields a current $2,000 per acre price, and Jeannie sells the land for $2,500 per acre, then she will only be liable for the taxes on the $500 per acre profit.

Just for the sake of easy figures, let's say the tax rate is 10%.....actually, it'll prolly be higher.

> WITH her established cost-basis - $500 per acre profit x 500 acres = $250,000 profit x 10% tax rate = $25,000 - her tax liability

> WITHOUT her established cost-basis - $2,000 per acre profit x 500 acres = $1,000,000 profit x 10% tax rate = $100,000- her tax liability


I was unaware of ANY of these financial issues, until my Dad passed away in 2010....I hired a financial planner, and this is exactly the way that he explained it to me....so, I had a land appraisal performed, to establish my cost-basis, and I sleep better because of it.

I, certainly, don't ever plan on having to sell any land, either, but what if a spouse, grandchild, or immediate family member is diagnosed with a catastrophic disease, heart attack, stroke, vehicle crash???....you just never know, from day to day, what you might be compelled to do!!!....you day'um sure can't expect Obamacare to help you out!!!

[Buckrub]

Really good info.

We'll be talking to a lawyer soon......one who knows farms. I'll ask about all this.

[Chicken Dinner]

Eddie, I think we're saying the same thing. (Heck, I'm just s CPA with a Masters degree in Tax. So, what do I know.? Circular 230 Disclosure: none of this should be considered tax advice unless you paid for it.:D)

[Big Muddy]

Chick, we are prolly saying the same thing, but what threw me off was your statement about the fmv, "stepping in", at the time of her mil's death....I took that to mean that the fmv(cost-basis) automatically kicked in, at her mil's death, without any form of documentation.

So, my question would be, if an appraisal is NOT performed, at the time of death, to document the fmv(cost-basis), then where do the heirs attain those fmv prices to establish their cost-basis???....common sense would dictate that any heirs would want their fmv(cost-basis) to be as high as possible, so surely, they wouldn't want to use the county's appraisal for property tax purposes, as those are not very reliable prices, and are nearly always lower than an actual appraisal, performed by a private land appraiser.

Also, since you're a CPA, isn't there a certain period of time, after death, that an appraisal must be performed, IF the heirs want one???

[Chicken Dinner]

Correct, you would need an appraisal, the valuation dat is date of death or six months later unless the property is sold it otherwise disposed of during the six months. Then it becomes date of death or date of disposal.

[Buckrub]

Y'all are over my head.

She died June, 2010. We didn't do an appraisal then. So, how would we possibly do one now that showed what the FMV was in 2010????

[Big Muddy]

OK, Chick, I understand that part....so, what if the heirs are somewhat ignorant folks, and don't know that they have to get an appraisal performed???....where does their fmv price come from, when they decide to sell???

[Buckrub]

He meant us. And we are.

And it's the same question I have.

[Big Muddy]

HAha, Bucky, I wasn't referring to ya'll ; just folks, in general, who don't know about this. ;)

[Buckrub]

Ed, I realize that it applied. I know you weren't calling names. But YES we are ignorant. Ignorance is not some vice. Everyone is ignorant. Do you know brain surgery? We're both ignorant on brain surgery.

I/we are just ignorant on many farm issues. We're learning, but no way do we have the knowledge and background that you and others here have. Geez. Also, we've not had the events occur that some of you have.

I'm a city boy. She's a country girl, but she wasn't involved in running the farm. She fed the troops. She helped run the house. But girls weren't involved in it, and she's now having to learn. Her brother, had he not had mental problems, would have been the main heir. But he's gone, with no spouse or heirs of his own...... And end result is that I figured we'd someday own this farm (or 1/2 of it), but I figured many years out, not 2010. I screwed up my taxes in 2011 and 2012 because of it, and almost bankrupted us. I hope I figured it out for last year, still waiting to hear from CPA. AND, we're finally going to see a lawyer about farm ownership, heir issues, tax issues, etc., but can't afford the one we want until the (hopefully) tax refund shows up. So......we're slowing getting there.

Meanwhile, these discussions help also..........thanks.

[Big Muddy]

Hey, boy, you calling me ignorant???....I DO know brain surgery because mine prolly needs some. ;)

[Chicken Dinner]

Sorry guys, they're making me earn my keep today and I'm not getting much internet time. Of course, you would mention 2010 because there were a bunch of special rules for that year (story of Bucky's life) and you "might" not even get a step up in basis. Generally, the person who inherits property gets the step up in basis we've been talking about based on how much the property is valued (based on an appraisal) by the decedent's estate on the date of the person's death, or alternatively as determined by the representative of the estate, six months later. (Some earlier years even had different alternative valuation dates.) I'd have to check the rules to see what happens if no appraisal was done and I just don't have the time today. I'm sure I knew it at some point, but just practice all that much in this area. I suspect you may be SOL and get stuck with the decedents cost basis. (If you even know what that is.)

One thing I've learned over all these years is that there are the general rules and then there's the rules for farmers, fishermen and preachers. I would really encourage you to get a CPA who practices in this area.

[Big Muddy]

Yep, Chick, we got lucky in 2010, as far as significant tax regulations for farmers....it's changed a lot since then, and I hope ole Bucky seeks some tax advice, and doesn't get his butt reemed.

BTW, I did a little checking, and it appears, in the absence of an independant appraisal, that the heirs are allowed to use the most current land appraisal from their county property tax rolls....that will help the heirs, to some degree.

[Buckrub]

I understand some of what y'all are saying.

But I see no way to get my 'butt reamed' as long as I/we don't sell this land. It's simply sitting there, generating lease (rent) income, and will be till we die. After that, I see a problem. But I don't see a problem now, or it would have already occurred, wouldn't it? Then again, I'm VERY naive here.

Still, we will be visiting a lawyer soon about all this. Hopefully I'll learn a lot.

[Chicken Dinner]

No issue unless you sell or until you die (possibly).

[Big Muddy]

Ya'll are both correct....that's the butt-reaming I was talking about....so, don't kick the bucket or sell anything. ;)

I'd be interested in what your lawyer says, Bucky....let us know how that goes for you.

[Buckrub]

No selling.

Not sure about dying. Have multiple fatal diseases, including breathing.

[Big Muddy]

In the immortal words of Clint, "Dying ain't much of a living, boy." ;)