Robert and Diane,husband and wife,live in Pennsylvania,a common law state.They purchased land as joint tenants in 2012 for $300,000.In 2016,Diane dies and bequeaths her share of the land to Robert.The land has a fair market value of $450,000.What is Robert's adjusted basis for the land?
A)$300,000
B)$375,000
C)$450,000
D)$750,000
E)None of the above

Question

Quizplus · Accepted Answer

Robert's adjusted basis for the land is stepped up to the fair market value at the time of Diane's death, which is $450,000. However, since they were joint tenants, Robert already owned half of the property, so he only gets a stepped-up basis for half of the property, which is $225,000. His original basis for his half of the property was $150,000, so his adjusted basis for the whole property is $375,000.

Robert and Diane,husband and Wife,live in Pennsylvania,a Common Law State