Mary inherits an interest in Laser Partnership from her Aunt Lillian during 2016.The fair market value of the interest as of the primary valuation date is $28,000.Aunt Lillian's adjusted basis was $16,000.What is Mary's initial basis and holding period in the partnership interest if she sells the interest seven months after inheriting it?
A)$16,000, short-term.
B)$16,000, long-term.
C)$28,000, short-term.
D)$28,000, long-term.
E)Both depend on whether it is sold at a gain or a loss.

Question

Quizplus · Accepted Answer

Mary's initial basis in the partnership interest is equal to the fair market value of the interest on the date of inheritance, which is $28,000. Mary's holding period in the partnership interest begins on the date of inheritance, so she has held the interest for less than one year and it is considered short-term. Therefore, the correct answer is (D) $28,000, long-term.

Mary Inherits an Interest in Laser Partnership from Her Aunt