Erica Ho dies, leaving a depreciable property to her daughter that has a capital cost of $150,000, a fair market value of $90,000, and a UCC of $65,000. Which of the following statements related to this event is NOT correct?

Question

Quizplus · Accepted Answer

Erica Ho will have a taxable capital gain of nil because she passed away, and the property is considered to have been disposed of at fair market value at the time of her death. Therefore, there is no gain or loss to report. Erica will have recapture of $25,000, which is the difference between the UCC and the fair market value at the time of death. The daughter's UCC will be $65,000, which is the UCC at the time of Erica's death. If the daughter later sells the property for $100,000, she will have a capital gain of $10,000, which is the difference between the sale price and the fair market value at the time of Erica's death.

Erica Ho Dies, Leaving a Depreciable Property to Her Daughter