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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Definitions:

Gametes

Reproductive cells that unite during sexual reproduction to form a new organism.

Diploid Zygote

The cell formed when two haploid gametes (from each parent) merge during fertilization, containing two complete sets of chromosomes, one from each parent.

Fungi

A realm comprised of organisms that create spores and derive nutrition from organic substances, encompassing molds, yeast, mushroom species, and toadstools.

Protists

A kingdom of mostly unicellular eukaryotic organisms that are not plants, animals, or fungi, including amoebas, algae, and plasmodium.