In an August 13, 2015 Collins Barrow Release (Taking Advantage of the Lifetime Capital Gains Exemption for Farm Property, Kathy Byvelds and Luther VanGilst), discussed were some common methods, issues and opportunities for using the CGE with the sale of farm property. The following points were noted:

• Qualified farm property (QFP) can include real property, quotas, interest in a farm partnership, and shares of a family farm corporation.
• The CGE base is $1,000,000, until the year where the $800,000 base limit increases by inflation to surpass it.
• Use of the CGE may trigger Alternative Minimum Tax (AMT). AMT can be recovered over 7 years from future tax payable.
• Use of the CGE may trigger a clawback of OAS.

these opportunities

Opportunities/Cautions

• The CGE can be used when transferring farmland to a farm corporation for a promissory note.
• If the corporation purchasing the farmland is not controlled by the vendor, a capital gains reserve may be used.
• The CGE can be used where partnership assets, or an interest in a partnership, are transferred to a corporation for a promissory note.
• Consider transferring the QFP to children to at least the extent that the CGE is completely used. If the consideration is higher than what the vendor wants, the additional amount may be forgiven in the Will.
• When selling farm property to a third party, the CGE of the children may be used if the property is transferred to them first. However, there are many issues with this approach such as the requirement that the children hold the property for 3 years prior to the third party sale.