Suzy inherited her mother\'s mountain home, which her grandfather had given to h
ID: 2722836 • Letter: S
Question
Suzy inherited her mother's mountain home, which her grandfather had given to her mom. The grandfather had bought the property for $100,000 twenty years ago prior to the gift. At the time of the gift to Suzy's mom, Suzy's grandfather paid approximately $5,000 in gift taxes, $3,000 of which was attributable to the appreciation on the house at the time the gift was made. At the time of Suzy's mom's death, the house was worth $500,000. Suzy then sold the home to move to California for net proceeds of $700,000. What is Suzy's gain on the sale of the mountain home?
a. $600,000
b. $200,000
c. $597,000
d. None of the above.
Explanation / Answer
When Suzy received the house then value of house = $500,000
So a value of $500,000 is basis for Suzy.
Sell price of house = $700,000
So gain of Suzy = $700,000 - $500,000
= $200,000
Gain for Suzy from sell of house is $200,000
Hence, Option (B) is correct answer.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.