In April 2012,Tim makes a gift of real estate (basis of $900,000;fair market value of $800,000)to his aunt.After the gift,the aunt makes $50,000 worth of capital improvements to the property.The aunt dies in March 2013,when the property is worth $840,000.Under the aunt's will,the realty passes to Tim.Tim's income tax basis in the property is:

Question

Quizplus · Accepted Answer

When property is inherited, the basis is generally the fair market value at the date of the decedent's death. Therefore, Tim's basis in the property is $840,000, which is the fair market value at the time of his aunt's death.

In April 2012,Tim Makes a Gift of Real Estate (Basis