Al Owns Stock with an Adjusted Basis of $100,000 and a Fair

question 61

Multiple Choice

Al owns stock with an adjusted basis of $100,000 and a fair market value of $300,000.He gives the stock to Jane on July 1, 2011.When Jane dies, the fair market value of the stock is $900,000.Jane's will provides that Al is to receive the stock.Which of the following is false?

• A)If Jane dies on June 1, 2012, Al's basis for the stock is $100,000.
• B)If Jane dies on August 1, 2012, Al's basis for the stock is $900,000.
• C)If Jane dies on June 15, 2012, Al's basis is $300,000.
• D)If Jane dies on July 1, 2012, Al's basis is $100,000.
• E)All of the above are true.

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Definitions:

Natural Business Year

A fiscal year that ends when business activities have reached the lowest point in an annual operating cycle.

Formal Accounting Records

Official documents and books that systematically record financial transactions and positions of a business.

Work Sheet

An internal document used by accountants to prepare financial statements, gather information, and perform adjustments before the closing of accounts.

Reversing Entries

Journal entries made the first day of the period that are the exact opposite of the related adjusting entries of the prior period.