Fred and Pearl Always Have Lived in a Community Property

question 40

Essay

Fred and Pearl always have lived in a community property state. At the time of Fred's prior death in 2013, they held stock that cost them $600,000 but was valued as follows.
Date of Death Six Months Later
$5,300,000 $5,200,000
Under Fred's will, his half of the stock passes to their daughter, Brandi. What income tax basis will Pearl and Brandi have in the stock, if Fred's estate:
a. Elects the alternate valuation date of § 2032?
b. Does not elect the alternate valuation date of § 2032?

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Definitions:

Post-Decisional Conflict

The dissonance associated with behaving in a counter-attitudinal way. Dissonance can be reduced by bringing the attitude into line with the behaviour.

Lotto Tickets

Paper or electronic slips purchased to participate in a lottery, offering a chance to win various prizes based on randomly drawn numbers.

Cognitive Dissonance

Cognitive dissonance refers to the mental discomfort experienced by an individual who holds contradictory beliefs, attitudes, or values, leading them to seek consistency.

Cognitions

The mental processes involved in acquiring knowledge and understanding through thought, experience, and the senses.