In April 2007,Austin makes a gift of real estate (basis of $200,000; fair market value $600,000)to his aunt.After the gift,the aunt makes $55,000 worth of capital improvements to the property.The aunt dies in March 2008,when the property is worth $640,000.Under the aunt's will,the realty passes to Kinsey (Austin's wife).Kinsey's income tax basis in the property is:

Question

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$200,000 (Austin's original basis)+ $55,000 (capital improvements made by aunt).Section 1014(e)applies as the property returns to the spouse of the donor within one year of its gift to the decedent.

In April 2007,Austin Makes a Gift of Real Estate (Basis