1. Faith inherited an undivided interest in a parcel of land from her father on
ID: 2529395 • Letter: 1
Question
1. Faith inherited an undivided interest in a parcel of land from her father on February 15, 2011. Her father had purchased the land on August 25,1965, and his basis for the land was $325,000. The fair market value of the land is $1,250,000 on the date of her father's death and is $1,100,000 six months later. The executor elects the alternate valuation date. Faith has nine brothers and sisters and each inherited a one-tenth interest. I) What is Faith's adjusted basis for her one-tenth undivided interest? II) What is her holding period for the land?
Explanation / Answer
Faiths adjusted basis for her one-tenth undivided interest
As the executor elects the alternate valuation date, Faith’s adjusted basis will be based on $1,100,000
Therefore,
Faith's adjusted basis for her one-tenth undivided interest = $1,100,000 /10
= $110,000
Faith's share of the fair market value of the land on the alternate valuation date will be $110,000.
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