Geraldine inherited a piece of land when her father Albert died on July 26, 2014. The FMV of the land at the date of death was $40,000 and cost Albert $20,000 in 2008. Geraldine sold the land on March 29, 2015 for $45,000. What are the amount and nature of the gain on the sale?

Question

Quizplus · Accepted Answer

The amount of gain on the sale of the land is calculated as the sales price ($45,000) minus the stepped-up basis ($40,000).

$45,000 - $40,000 = $5,000

Since Geraldine held the land for less than a year (from July 26, 2014, to March 29, 2015), the gain is considered a short-term capital gain. Therefore, the answer is B) $5,000 capital gain.

Geraldine Inherited a Piece of Land When Her Father Albert