Geraldine inherited a piece of land when her father Albert died on July 26,2015 The FMV of the land at the date of death was $40,000 and cost Albert $20,000 in 2009.Geraldine sold the land on March 29,2016 for $45,000.What are the amount and nature of the gain on the sale?
A)$25,000 ordinary gain.
B)$25,000 capital gain.
C)$5,000 capital gain.
D)$5,000 ordinary gain.

Question

Quizplus · Accepted Answer

The FMV of the land at the date of death becomes the cost basis for Geraldine, which is $40,000. When she sells the land for $45,000, her capital gain is $5,000 ($45,000 - $40,000). Since she held the land for less than a year, the nature of the gain is short-term capital gain.

Geraldine Inherited a Piece of Land When Her Father Albert