I NEED HELP! tu Atteipt Question 1 (1 point) B In 2007 Gregory L. Grantee receiv

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I NEED HELP!

tu Atteipt Question 1 (1 point) B In 2007 Gregory L. Grantee received a 50% interest in small ranch property (100 acres) from his grandfather by gift. The grandfather had purchased the property in 1945 just after the war for $14,500 . Grandfather wanted Gregory to have the 50% interest in case the government tried to take all of it at the time of his (grandfather's) death. Grandfather died in 2,010 when the property was worth $450,000. Gregory did not inherit grandfather's half, but sold his interest in the property in 2012 for $550,000. What was Gregory's basis in the property? Your Answer: WPNOL )(A F5 F7 F 8 F9

Explanation / Answer

Gregory's basis would be equal to 50% of the value of property at the time his grandfather passed away.

Property value at the time of grandfather's death = $450,000

His basis in the property = 50% 0f $450,000 = $225,000

so now when capital gains are calculated, the basis will be $225,000 and only appreciation over this amount will be taxable

If property is sold for $550,000, then capital gain will be = $550,000 - $225,000 = $325,000

Gregory's basis = $225,000

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