Ivanka and Donald purchase land for $1 million—Donald furnishes $400,000 and Iva

Question

Ivanka and Donald purchase land for $1 million—Donald furnishes $400,000 and Ivanka $600,000 of the purchase price. Title to the property is listed as joint tenants with right of survivorship. Donald dies first 2.5 years later when the land is worth $2 million. (a) How much of the property is included in Donald’s gross estate? (calculation only) (b) How would your answer change (if at all) if Donald died 4 years later, when the land is worth $2.1m. (calculation and brief explanation) (c) What is Ivanka’s income tax basis in the property? (calculation only)

Explanation / Answer

Ratio between Donald and Ivanka = 400,000:600,000 = 4:6 (a) Donald gross estate = 20,00,000 x 4/6 = 2000000*4/6 = $ 1,333,333 (b) Donald gross estate = 21,00,000 x 4/6 = 2100000*4/6 = $ 1,400,000

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