Terrell and Michelle are married and living in New York,which is a not a community property state.They jointly own property with an adjusted basis of $240,000.On December 2 of this year,Michelle died when the property had a fair market value of $260,000.Terrell's basis in the property after Michelle's death is

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In a community property state, the surviving spouse would automatically receive a step-up in basis for the entire property to fair market value at the time of the other spouse's death. However, in a non-community property state like New York, only the portion of the property owned by the deceased spouse receives a step-up in basis. Michelle owned 50% of the property, so her half receives a step-up in basis to $130,000 (50% of the fair market value). Terrell's half retains its original basis of $120,000. Therefore, Terrell's new basis after Michelle's death is $120,000 + $130,000 = $250,000.

Terrell and Michelle Are Married and Living in New York,which