Lenny inherited 100 acres of land on the death of his father in 2015. A Federal

Question

Lenny inherited 100 acres of land on the death of his father in 2015. A Federal estate tax return was filed and the land was valued at $300,000 (its fair market value at the date of the death). The father had originally acquired the land in 1970 for $19,000 and prior to his death had made permanent improvements of $6,000 What is Lenny's basis in the land? Kay is a beneficiary of a estate that held stock which had a fair market valur of $34,000 on August 4, 2014. the date of the decedent's death. The executor distributes the stock of Kay on November 12,2015, at which time the fair market value is #32,500. The fair market value of February 4, 2015, is $32,000. In filing the estate tax return, the executor elects the alternate valuation date. Kay sells the stock on June 10, 2016, for $ 33,000. What is her recognized gain or loss?

Explanation / Answer

(1)

Answer is option (c) $300000.

Explanation:

When any property inherited from someone, in that case basis will be fair market value at the time of death.

(2)

Answer is option (c) $500.

Explanation:

Kay sells the stock at $33000 but fair market value of stock when Kay received it from the Executor was $32500. Thus gain will be ($33000 – $32500) = $500.

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