[john b]

Fred and Ethel (brother and sister), residents of a noncommunity property state, own unimproved land that they hold in joint tenancy with rights of survivorship. The land cost $100,000 of which Ethel paid $80,000 and Fred paid $20,000. Ethel died during 2018 when the land was worth $300,000, and $240,000 was included in Ethel’s gross estate. What is Fred’s basis for the property after Ethel’s death?

The answer is 260,000, the 240k that was included in Ethel’s estate, plus Fred’s original 20k basis. Why do you use the 240k from Ethel’s estate for Fred’s basis? Thanks!

[Desmond]

I think its like inherited property, you receive it at FMV at date of death (or as of a date upto 6 months). So new basis is 80% of 300k + Fred's original 20k

[Author]

Replies