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Hi egon, The advice for your parents to see a good tax advisor is right. If it were simply their primary residence, the first $500,000 of capital gain (amount above the original purchase price, to put it too simply) would be tax free to them under the circumstances you describe. The farm being a business as well as their primary residence is what complicates the matter. For what it's worth, people over 50 who have run a farm are generally smart enough and well educated enough to read and understand tax law, but they rarely believe that they can. The trick is to read the material (available at any IRS office, or by mail, or online) five or six times, call the IRS help line and talk to someone about it (they're almost always very helpful, and usually very nice) and repeat as necessary. In one day a person can become well informed about a particular tax issue. And guess what? The proportion of tax advisors, including CPA's and tax lawyers, who are complete fools is just as high as in any other occupation. They just get a lot more per hour for their bad advice than working class fools. All the best, Stan
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