@patel thank you for your intake! appreciate it.
Hall was bequeathed 500 shares of common stock under his father’s will. Hall’s father had paid $2,500 for the stock 10 years ago. Fair market value of the stock on February 1, Year 1, the date of his father’s death, was $4,000 and had increased to $5,500 six months later. The executor of the estate elected the alternate valuation date for estate tax purposes. Hall sold the stock for $4,500 on June 1, Year 1, the date that the executor distributed the stock to him. How much income should Hall include in his individual income tax return for the inheritance of the 500 shares of stock that he received from his father’s estate?
A.
$5,500
B.
$4,000
C.
$2,500
Correct D.
$0
Explanation: If the alternate value is chosen and the property is disposed of before the 6-month period has expired, that property shall be valued at the fair market value at the date of disposition, the sale price. Since Hall sold the stock before the 6-month period ended, his basis equals his sale price, and no gain or loss exists.
The explanation is kind of confusing to me. I thought the reason the answer was 0 because the receipt of an inheritance is nontaxable.
FAR - 71, 78
AUD - 71, 72, 78
BEC - 75
REG - 48, 60, 67, 76
.