Multiple answers. Need a correct one with explanation Emma died owning real esta
ID: 2343287 • Letter: M
Question
Multiple answers. Need a correct one with explanation
Emma died owning real estate with a value of $500,000. Emma received the property in 1994 as a gift from her mother, Charlotte. At the time of the gift, the property was worth $250,000. Charlotte purchased the property in 1991 for $180,000. Upon Emma's death, the property passed through inheritance to Jane. No estate tax return (Form 706) is due of filed. Which of the following isTRUE about the basis of the property? A) Emma's basis in the property before death is $180,000 and Jane's basis in the property is $500,000 B) Emma's basis in the property before her death is $250,000, and Jane's basis in the property is $250,000 C) Emma's basis in the property befpre her death is $250,000 and Jane's basis is $500,00 D) None of the above
Explanation / Answer
Assets received as a gift retain the net book value on the donar's books plus any gift tax paid due to the appreiction in the value of the gift.
As Emma received the property as a gift from her mother Charlotte, Emma' basis = $180,000 (Charlotte's basis)
Basis for the assets received as inheritance = Fair market value at date of death or elected alternative valuation date.
As the elected alternative valuation date is not mentioned, Jane basis after Emma's death = $500,000 (Fair market value at date of death)
The answer is A.
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