A person owns a section of farm land and is cash renting it to a long time neighbour who is not a relative.
a) Given the land has an adjusted cost base of $200,000, a current market value of $800,000 and the person has a marginal tax rate of 44%, what is the contingent tax liability to the person if he/she sells the land for the market value?
b) What does this person have to do to get the land designated Qualified Farm Property?
c) At what range of values can the person transfer ownership of the land to their grand child?
d) Calculate the contingent tax liability of the 2 extremes stated in c) above for the grandchild if he/she has a marginal tax rate of 44%.