Business assets
April 7, 2013 | 25,00 EUR | answered by StB Patrick Färber
After the death of the parents 20 years ago, the agricultural farm became an inheritance community (3 sisters). In 1993, a so-called partial division of inheritance took place; my wife received the entire agricultural farm, while the other 2 sisters each received a building plot. One plot of land was not distributed and remained part of the inheritance community. It was also not cultivated anymore.
My question is: Is this individual plot of land still considered part of the farm assets or not?
Dear questioner,
Based on the information you provided and within the scope of your inquiry, the following can be stated:
Due to the inheritance, the agricultural operation was continued by the community of heirs. Am I correct in understanding that a total of 3 building plots (2 of which were distributed in 1993, 1 still part of the community of heirs) were included in the agricultural assets before the inheritance?
If this is the case, the following applies:
The Goodwill of the community of heirs, which is no longer being operated, generally retains the characteristics of business assets. However, it would need to be examined whether this "non-use" constitutes a change in use that could result in a withdrawal to private assets at market value.
If the Goodwill cannot be allocated to either necessary business assets or necessary private assets, it will remain classified as business assets (continuing business assets). There is no automatic forced withdrawal to private assets due to a change in use.
The Federal Fiscal Court (BFH) has ruled that fallow Goodwill in agriculture is considered as continuing business assets. This is because there is neither an explicit withdrawal to private assets nor is it necessary business assets (due to lack of operation).
Result: Business assets
Did this help you so far?
Best regards,
Patrick Färber
Tax Advisor
patrickfaerber@arcor.de
