Kelly inherits land which had a basis to the decedent of $95,000 and a fair market value of $50,000 on August 4, 2012, the date of the decedent's death.The executor distributes the land to Kelly on November 12, 2012, at which time the fair market value is $49,000.The fair market value on February 4, 2013, is $45,000.In filing the estate tax return, the executor elects the alternate valuation date.Kelly sells the land on June 10, 2013, for $48,000.What is her recognized gain or loss?
A)($1,000).
B)($2,000).
C)($47,000).
D)$1,000.
E)None of the above.

Question

Quizplus · Accepted Answer

Since the executor elected the alternate valuation date, the basis of the property received by Kelly is its fair market value on November 12, 2012, which is $49,000. When Kelly sells the land on June 10, 2013, for $48,000, she incurs a loss of $1,000 ($48,000 - $49,000). This loss is recognized for tax purposes. Therefore, the answer is A) ($1,000).

Kelly Inherits Land Which Had a Basis to the Decedent