In April 2012, Jacob gives his mother, Grace, real estate (basis of $500,000; fair market value of $900,000). Jacob paid no Federal gift tax on the transfer. Before Grace's death in March 2013, she makes $20,000 in capital improvements to the property. The real estate is worth $910,000 when Grace dies. What is the income tax basis of the property to Grace's heir under each of the following assumptions?
a. The heir is Jacob's wife.
b. The heir is Grace's brother (i.e., Jacob's uncle).

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The Answer of In April 2012, Jacob gives his mother, Grace, real estate (basis of $500,000; fair market value of $900,000). Jacob paid no Federal gift tax on the transfer. Before Grace's death in March 2013, she makes $20,000 in capital improvements to the property. The real estate is worth $910,000 when Grace dies. What is the income tax basis of the property to Grace's heir under each of the following assumptions?
a. The heir is Jacob's wife.
b. The heir is Grace's brother (i.e., Jacob's uncle).

In April 2012, Jacob Gives His Mother, Grace, Real Estate