Harry Inherited a Residence from His Mother When She Died

question 54

Multiple Choice

Harry inherited a residence from his mother when she died.The mother had a tax basis of $566,000 for the residence when she died and the residence was worth $433,000 at the date of her death.Which of the statements below is correct?

• A)Harry's holding period for the residence includes his mother's holding period for the residence.
• B)Harry's holding period for the residence does not include his mother's holding period for the residence.
• C)Harry's holding period for the residence is automatically long term.
• D)b and c
• E)None of the above.

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Definitions:

Commercial Banks

Financial institutions that provide services such as accepting deposits, providing business loans, and offering basic investment products.

Government Securities

Financial instruments issued by the government to finance its expenditures, including bonds, notes, and bills, that pay interest to investors.

Dollar Amount

The value of an item or transaction expressed in U.S. dollars, a common measure for comparing financial value.

Federal Reserve Deposits

Reserves held by commercial banks at the Federal Reserve, which are used to meet reserve requirements and facilitate day-to-day banking operations.