In March 2007,Tyrone Gives His Mother,Grace,real Estate (Basis of $200,000;

question 116

Essay

In March 2007,Tyrone gives his mother,Grace,real estate (basis of $200,000; fair market value of $700,000).Tyrone paid no Federal gift tax on the transfer.Before Grace's death in February 2008,she makes $40,000 in capital improvements to the property.The real estate is worth $730,000 when Grace dies.What is the income tax basis of the property to Grace's heir under each of the following assumptions?
a.The heir is Tyrone's wife.
b.The heir is Grace's brother (i.e., Tyrone's uncle).

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