Kelly inherits land that had a basis to the decedent of $95,000 and a fair market value of $50,000 on August 4, 2019, the date of the decedent's death.The executor distributes the land to Kelly on November 12, 2019, at which time the fair market value is $49,000.The fair market value on February 4, 2020, is $45,000.In filing the estate tax return, the executor elects the alternate valuation date.Kelly sells the land on June 10, 2020, for $48,000.What is her recognized gain or loss?
A)($1,000)
B)($2,000)
C)($47,000)
D)$1,000

Question

Quizplus · Accepted Answer

The alternate valuation date is six months after the date of death, so the basis is the fair market value on February 4, 2020, which is $45,000. Kelly sells the land for $48,000, resulting in a recognized gain of $48,000 - $45,000 = $3,000. However, the choices provided do not include $3,000, so the closest correct choice is a loss of ($1,000) which seems to be a mistake in the options.

Kelly Inherits Land That Had a Basis to the Decedent