Ludwig died on April 5, 2018. As part of his will, he leaves land for which he paid $6,000 on December 31, 2017, to his son Don. On April 5, 2018, the land is worth $11,000. However, due to local real estate conditions, the land declines in value. On July 28 it is worth only $10,000; it declines further to $9,000 on October 5 and plunges to $7,000 on December 18.
I.In the absence of any special elections, Don's basis in the land is $11,000.
II.If the executor elects the alternate valuation date and distributes the land to Don on July 28, Don's basis in the land will be $9,000.
III.If the executor elects the alternate valuation date and distributes the land to Don on December 18, Don's basis will be $7,000.
IV.In the absence of any special elections, if the executor distributes the land to Don on October 5, Don's basis in the land will be $9,000.

Question

Ludwig died on April 5, 2018. As part of his will, he leaves land for which he paid $6,000 on December 31, 2017, to his son Don. On April 5, 2018, the land is worth $11,000. However, due to local real estate conditions, the land declines in value. On July 28 it is worth only $10,000; it declines further to $9,000 on October 5 and plunges to $7,000 on December 18.
I.In the absence of any special elections, Don's basis in the land is $11,000.
II.If the executor elects the alternate valuation date and distributes the land to Don on July 28, Don's basis in the land will be $9,000.
III.If the executor elects the alternate valuation date and distributes the land to Don on December 18, Don's basis will be $7,000.
IV.In the absence of any special elections, if the executor distributes the land to Don on October 5, Don's basis in the land will be $9,000.
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Quizplus · Accepted Answer

I. In the absence of any special elections, the basis of inherited property is its fair market value on the date of the decedent's death, which in this case is $11,000.

Ludwig Died on April 5, 2018