In April 2010, Ed gives his mother, Grace, real estate (basis of $400,000; fair market value of $800,000). Ed paid no Federal gift tax on the transfer. Before Grace's death in March 2011, she makes $40,000 in capital improvements to the property. The real estate is worth $840,000 when Grace dies. What is the income tax basis of the property to Grace's heir under each of the following assumptions?

Question

In April 2010, Ed gives his mother, Grace, real estate (basis of $400,000; fair market value of $800,000). Ed paid no Federal gift tax on the transfer. Before Grace's death in March 2011, she makes $40,000 in capital improvements to the property. The real estate is worth $840,000 when Grace dies. What is the income tax basis of the property to Grace's heir under each of the following assumptions?
In April 2010, Ed gives his mother, Grace, real estate (basis of $400,000; fair market value of $800,000). Ed paid no Federal gift tax on the transfer. Before Grace's death in March 2011, she makes $40,000 in capital improvements to the property. The real estate is worth $840,000 when Grace dies. What is the income tax basis of the property to Grace's heir under each of the following assumptions?

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The Answer of In April 2010, Ed gives his mother, Grace, real estate (basis of $400,000; fair market value of $800,000). Ed paid no Federal gift tax on the transfer. Before Grace's death in March 2011, she makes $40,000 in capital improvements to the property. The real estate is worth $840,000 when Grace dies. What is the income tax basis of the property to Grace's heir under each of the following assumptions?

In April 2010, Ed Gives His Mother, Grace, Real Estate