I am having trouble with understanding Basis and how the FMV work. Needing more

Question

I am having trouble with understanding Basis and how the FMV work. Needing more clarification.

Mark for follow up Question 21 of 81. Martha inherited a cottage from her father with a basis of $50,000 and a FMV of $78,000. When Martha died, her son, Noah, inherited the cottage, now worth $110,000. Which of the following statements is true? O Martha's basis was $78,000 and Noah's basis is $110,000. O Martha's basis was $50,000 and Noah's basis is $78,000 O Martha's basis and Noa's basis remain at the original basis of $50,000. If Noah sells the property, his basis is $110,000, but his basis for depreciation is S50.000. Mark for follow up Question 22 of 81

Explanation / Answer

The correct choice is :- Martha's basis was $ 78,000 and Noah's basis is $ 110,000

Explanation : - Inherited property is assigned a basis equal to the property's fair market value on the date of the decendent's death . This is called " stepped up basis" because the basis of the property to the recipient steps up from whatever the decendent's basis was to its FMV at the decendent's death.

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.