Question

#10) Sally, mother of Tally and Wally, owned 100 acres of undeveloped land when she died on October 1, 2012. Sally had acquired the land in 1978 for $20,000. Sally’s Will was admitted to probate, and the Will specifically devised the 100 acres of undeveloped land to Sally’s children Tally and Wally, as tenants in common. No estate tax return was required to be filed but several appraisals were acquired which all concluded that the fair market value as of the date of Sally’s death was $300,000. Tally and Wally both survived Sally, and the land was distributed to Tally and Wally in 2013 when the property was still worth $300,000. Tally and Wally did not make any improvements to the land, and in 2019, Wally transferred Wally’s undivided one-half interest as tenant-in-common to Tally. At the date of the transfer to Tally, the fair market value of Wally’s undivided one-half interest as tenant in common was $800,000. After the transfer, how much is Tally’s basis in the 100 acres of undeveloped land?

Group of answer choices

a-$300,000

b-$550,000

c-$325,000

Answer 1

Solton dair market value as on the date of fair Market value as on the date of Sally's death = 300000 Transfer to Tally 5.800000 Hence the cost basis for one half basis to Tally = 300000 = 150000 Similarly cost basis for one half basis to wally = 300000 300DOO - 150000 when a property is gifted, the cost basis to transfer the Cost basis to previous owner. so, cost basis to Tally for another one half = lost basis for - fose one half bases to Wally = 150000 land Therefore bases in 100 acres of undeveloped = 150000 + 150000 = 300000 option (a) is correct.