Becky inherited property from her mother seven years ago. The property was listed on her mother's estate tax return (Form 706) as having a value of $300,000. Becky is going to sell the property for $800,000, but she believes her real income tax basis is much more than $300,000. Which of the following factors, if any, helps Becky in challenging this basis?

Question

Quizplus · Accepted Answer

If the value listed on Form 706 was the result of a negotiated compromise between the IRS and the estate, it would be difficult to challenge the basis. However, if the value was not a result of a compromise and Becky believes it was too low, she may have grounds to challenge the basis. Filing an amended Form 706 is not a feasible option as the statute of limitations for amending a tax return has passed. Uncertainty about the value and serving as the executor of the estate do not affect the basis.

Becky Inherited Property from Her Mother Seven Years Ago