Stuart owns land with an adjusted basis of $190,000 and a fair market value of $500,000.If the property is going to be given to Stuart's nephew, Alex, it is preferable for the transfer to be by inheritance rather than by gift.

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By transferring the property through inheritance, Alex will receive a step-up in basis to the fair market value at the time of Stuart's death. This means that if Alex were to sell the property in the future, his capital gains tax liability would be based on the value of the property at the time of inheritance, rather than the value at the time Stuart originally acquired the property. This could result in significant tax savings for Alex. On the other hand, if the property were transferred by gift, Alex would receive the same basis as Stuart and would not receive a step-up in basis upon inheritance.

Stuart Owns Land with an Adjusted Basis of $190,000 and a Fair