Robert and Diane, husband and wife, live in Pennsylvania, a common law state. They purchased land as joint tenants in 2010 for $300,000. In 2014, Diane dies and bequeaths her share of the land to Robert. The land has a fair market value of $450,000. What is Robert's adjusted basis for the land?

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In a joint tenancy, each owner has an equal share of the property with a stepped-up basis equal to the fair market value at the time of the other owner's death. Therefore, when Diane passed away, Robert's adjusted basis for her share of the land increased to $225,000 ($450,000 fair market value divided by 2). Robert's original adjusted basis for his half was $150,000. Thus, his new adjusted basis for the entire property is $375,000 ($150,000 + $225,000).

Robert and Diane, Husband and Wife, Live in Pennsylvania, a Common