My MIL is turning 80 this year and has a chunk of land she inherited from her mother when she passed away years ago. This is Kansas farm land and it is adjacent to the rest of the farm that her brother inherited and actively farms with his family children and spouses...He's 82. While visiting her this past week she casually mentioned how she transferred ownership of the land to my husband and his sister a few months ago (in 2015), giving each half. In total it's 160 acres, each of them got 80 acres. I'm not even sure why she did this other than I think she's trying to make sure all of her affairs are in order since she's getting up there in age (though she still runs around and works around her house and garden like someone much younger).
After further questioning she's still paying the taxes and collecting the "rent" on the land. I don't think she's actually renting out the land to be farmed but I do know she has it enrolled in government programs that pay her to not farm the land. Something about preserving Kansas prairie lands so she has to have specific types of wild flowers growing on it and such. I actually think her brother set it all up for her as he knows all the ins and outs of farm land management. I'm not sure how she was able to transfer ownership but still maintain these programs on the land but she's confident that nothing's changed in the management of the land, just the names on the title. I think she honestly didn't realize there could be any tax consequences to transferring the title and didn't even think to ask any of us if she should do it. She did it all without any of our knowledge, though perhaps my SIL knew about it as they live close together and we live several states away. SIL would have been similarly ignorant anyways on how this might have to be taxed.
My immediate thought is that someone will have to pay taxes on the land value as a gift for 2015 taxes, which MIL estimates is around $1000 per acre, and after thinking it through, it'll likely be her. MIL is meeting with her accountant this week to do her 2015 taxes and she said she will ask him about the land but I'd like to get some other opinions on what this might mean for her/us. If it matters, she also gifted us $5000 at Christmas time as an early "inheritance" which SIL also received. Does anyone have any advice or know how this transfer would be treated?