Gain from the Sale of a Farm: Insolvent Farmer
If you sold insolvent farm property, you may not have to pay Minnesota income tax on some of the profit from the sale. You may be able to subtract some of the profit from your Minnesota taxable income.
Farm property includes agricultural production property, other real property, or equipment used in a farm business that you owned and operated.
To qualify for this subtraction, all of these must be true:
- You owned and operated the farm
- Your debts were greater than the fair market value of your assets immediately before the sale
- The gain from the sale was included in your federal adjusted gross income on federal Form 1040
- You applied the sale proceeds to paying off the mortgage, contract for deed, or any liens on the property
To claim the subtractions, complete Schedule M1MB, Business Income Additions and Subtractions. Include Schedule M1MB when you file Form M1, Individual Income Tax.