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Stacey Inherits Unimproved Land (Fair Market Value of $6 Million)

question 125

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Stacey inherits unimproved land (fair market value of $6 million) from her father on June 1, 2010. Martha disclaims her interest in the property as follows: one-third on December 1, 2010; one-third on January 3, 2011; and the remaining one-third on May 31, 2011. In all cases, the disclaimers pass the interest to her son (the next heir under state law) . The Federal gift tax applies to Stacey for:


Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life.

Accumulated Depreciation

Accumulated depreciation represents the total amount of depreciation expense that has been recorded against a fixed asset since it was acquired, reducing its book value on the balance sheet.

Operating Activities

Business activities that relate directly to the production, sale, and delivery of a company's products and services.

Depreciation

The process of allocating the cost of buildings and equipment (but not land) over their productive lives using a systematic and rational method

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