Kelly inherits land which had a basis to the decedent of $95,000 and a fair market value of $50,000 on August 4,2013,the date of the decedent's death.The executor distributes the land to Kelly on November 12,2013,at which time the fair market value is $49,000.The fair market value on February 4,2014,is $45,000.In filing the estate tax return,the executor elects the alternate valuation date.Kelly sells the land on June 10,2014,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

Since the executor elected the alternate valuation date, the basis of the inherited property to Kelly is its fair market value on the date of distribution, which is November 12, 2013, or $49,000.

When Kelly sells the property on June 10, 2014, for $48,000, her recognized loss is calculated as follows:

Sales price: $48,000
Basis: $49,000
Recognized loss: ($1,000)

Therefore, the answer is A) ($1,000).

Kelly Inherits Land Which Had a Basis to the Decedent