Harold and Mary are married and live in a community property state. During the marriage Harold bought a parcel of real estate for $100,000 in community funds and titled the property in his name alone. Mary died on January 30th of this year and wassurvived by Harold who did not remarry. The parcel of real property was worth $250,000 on January 30th of this year but was only worth $220,000 at year end. What amount, if any, is included in Mary's gross estate?

Question

Quizplus · Accepted Answer

In a community property state, property acquired during the marriage with community funds is considered community property regardless of how it is titled. Therefore, Mary is considered to have owned 50% of the property and her estate is entitled to 50% of the value at her date of death. The value at her date of death was $250,000, so her estate is entitled to 50% of that amount, or $125,000. Since the property decreased in value to $220,000 at year-end, there is no additional amount included in her gross estate beyond the $125,000 already accounted for. Therefore, the correct answer is D) $125,000.

Harold and Mary Are Married and Live in a Community