Jamahl and Indira are married and live in a common law state.They jointly own real property with an adjusted basis of $200,000.When the property has a FMV of $450,000,Jamahl dies leaving all of the property to Indira.If she later sells the property for $700,000,what is Indira's gain on the sale?

Question

Quizplus · Accepted Answer

When Jamahl dies, the property receives a step-up in basis to its fair market value at the time of his death, which is $450,000. Therefore, Indira's new adjusted basis in the property is $450,000. When she sells the property for $700,000, her gain is the sales price minus her adjusted basis, or $700,000 - $450,000 = $250,000.

Jamahl and Indira Are Married and Live in a Common