Kelly Inherits Land Which Had a Basis to the Decedent

question 76

Multiple Choice

Kelly inherits land which had a basis to the decedent of $95,000 and a fair market value of $50,000 on August 4, 2012, the date of the decedent's death.The executor distributes the land to Kelly on November 12, 2012, at which time the fair market value is $49,000.The fair market value on February 4, 2013, is $45,000.In filing the estate tax return, the executor elects the alternate valuation date.Kelly sells the land on June 10, 2013, for $48,000.What is her recognized gain or loss?

• A)($1,000).
• B)($2,000).
• C)($47,000).
• D)$1,000.
• E)None of the above.

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Definitions:

Short-Run Average Total Cost (ATC₂)

The total cost divided by the quantity produced in the short-run, where some inputs are fixed.

Diminishing Marginal Returns

A principle stating that if one factor of production is increased while others are kept constant, the resulting increase in output will eventually decline.

Short-Run Average Total Cost (ATC)

The total cost per unit of output in the short run, where some factors of production are fixed.

Profit-Maximizing Level

The output level at which a firm achieves the highest profit, where marginal revenue equals marginal cost.