Many farm families incorporated their farm assets in the 1970s and early 1980s following the advice of their accountants. It was supposed to be a way to save taxes and make transition planning to the next generation easier. At the time, it was good advice.
However, since 1986, when Congress changed the corporate tax rules, farm families pay a steep price if they want to take their land out of their C-corporation.
Corporations do not qualify for capital gains on land held within a C Corporation, so they would pay 35% federal rates on the gain from any ...