Question

T-9. Jack inherited a house from his father, Zack, on the death of his father, in January 2016. A Federal estate tax return was filed and the value of the land as finally determined for Federal estate tax purposes was $300,000 (the property’s fair market value at the date of the death). Zack had acquired the house in 1958 for $19,000 and prior to Zack’s death had made permanent improvements of $50,000. How much is Jack’s basis in the land?

                a.             $19,000

                b.             $69,000

                c.             $300,000

                d.             $369,000

Please show your calculations. Thanks.

Answer 1

Jack’s basis in the land:-

c.             $300,000

Explanation:-

With assets you inherit, the cost basis is usually equal to the fair market value (FMV) of the property or asset at the time of the decedent's death or when the actual transfer of assets was made. Since, in the above scenario, property’s fair market value at the date of the death of Zack is $300,000. So Jack’s basis in the land will be $300,000.

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