Sheila was is 96 years old and paid-off her mortgage 60 years ago. The price of the house was a whopping $23,000. The date of death is used for valuation purposes. At this time, if Sheila gifts her house to her grandson, what method would be used to determine federal transfer taxes?

Question

Quizplus · Accepted Answer

When a house is gifted the federal transfer of taxes, the fundamental principle of valuation is that tax is generally imposed on the fair market value of the property as of the date of the transfer. Fair market value is defined as the price that a willing buyer would pay a will seller where both had reasonable knowledge of the relevant facts of the transaction and neither was under any compulsions to buy or to sell. The principle of fair market value applies to a wide variety of properties and situations.

Sheila Was Is 96 Years Old and Paid-Off Her Mortgage