Rosie inherits 1,000 shares of Northern Skies Airline Corporation stock from the estate of her Uncle Tony.Tony died on July 2,2016.The stock's value on July 2,2016,is $4,000.Tony's basis in the stock was $3,000.The stock has a fair market vale of $7,000 on October 1,2016,when it is transferred to her.Rosie sells the stock October 11,2017.What is Rosie's basis in the stock?

Question

Quizplus · Accepted Answer

Rosie's basis in the stock is the fair market value on the date of Tony's death, which is $4,000. This is because inherited property generally takes a "stepped-up" basis to the fair market value at the date of the decedent's death.

Rosie Inherits 1,000 Shares of Northern Skies Airline Corporation Stock