Kelly inherits land which had a basis to the decedent of $95,000 and a fair market value of $50,000 on August 4,2010,the date of the decedent's death.The executor distributes the land to Kelly on November 12,2010,at which time the fair market value is $49,000.The fair market value on February 4,2011,is $45,000.In filing the estate tax return,the executor elects the alternate valuation date.Kelly sells the land on June 10,2011,for $48,000.What is her recognized gain or loss?
A)($1,000).
B)($2,000).
C)($47,000).
D)$1,000.
E)None of the above.

Question

Quizplus · Accepted Answer

The alternate valuation date is six months after the date of death, which is February 4, 2011. The fair market value on this date is $45,000. Kelly sells the land for $48,000, resulting in a recognized gain of $3,000 ($48,000 - $45,000). However, the choices provided do not include this gain, so the closest option reflecting a loss is ($1,000), which seems to be a mistake in the options.

Kelly Inherits Land Which Had a Basis to the Decedent