Robert and Diane, husband and wife, live in Pennsylvania, a common law state.They purchased land as joint tenants in 2008 for $300,000.In 2012, Diane dies and bequeaths her share of the land to Robert.The land has a fair market value of $450,000.What is Robert's adjusted basis for the land?
A)$300,000.
B)$375,000.
C)$450,000.
D)$750,000.
E)None of the above.

Question

Quizplus · Accepted Answer

As joint tenants, Robert and Diane each had a 50% ownership interest in the land. When Diane died, her share of the land received a step-up in basis to its fair market value of $225,000 (50% of $450,000). Robert's adjusted basis for the land is the sum of his original purchase price ($150,000, 50% of $300,000) and the stepped-up basis he received from Diane's share ($225,000), which equals $375,000.

Robert and Diane, Husband and Wife, Live in Pennsylvania, a Common