Mary inherits an interest in Laser Partnership from her Aunt Lillian during 2018. 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?

Question

Quizplus · Accepted Answer

Mary's initial basis in the inherited partnership interest is the fair market value on the date of Aunt Lillian's death, which is $28,000. For inherited property, the holding period is automatically considered long-term, regardless of how long the inheritor actually holds the property before selling it.

Mary Inherits an Interest in Laser Partnership from Her Aunt