Ed Gives Steve Land with an Adjusted Basis of $40,000

question 98

Multiple Choice

Ed gives Steve land with an adjusted basis of $40,000 and an FMV of $90,000. Ed paid no gift tax. Ed then inherits the same land back from Steve at Steve's death eight months later. At Steve's death, the land is worth $120,000. Ed's basis in the land becomes

• A)$120,000.
• B)$90,000.
• C)$40,000.
• D)cannot be determined from the facts given

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