Exam 14: Property Transactions: Determination of Gain or Loss and Basis Considerations

If the alternate valuation date is elected by the executor in 2017, the total basis of inherited property will be more than what it would have been if the primary valuation date and amount had been used.

The basis for depreciation on depreciable gift property received is the donor's adjusted basis of the property at the date of the gift (assuming no gift taxes are paid). The rule applies regardless of whether the fair market value at the date of the gift is greater than or less than the donor's adjusted basis.

Transactions between related parties that result in disallowed losses might later provide a tax benefit to the related party buyer.

The holding period for nontaxable stock dividends that are the same type (i.e., common on common) includes the holding period of the original shares, but the holding period for nontaxable stock dividends that are not the same type (i.e., preferred on common) is new and begins on the date the dividend is received.

Purchased goodwill is assigned a basis equal to cost, which is calculated using the residual method associated with the purchase of a business.

Kelly inherits land which had a basis to the decedent of $95,000 and a fair market value of $50,000 on August 4, 2017, the date of the decedent's death. The executor distributes the land to Kelly on November 12, 2017, at which time the fair market value is $49,000. The fair market value on February 4, 2018, is $45,000. In filing the estate tax return, the executor elects the alternate valuation date. Kelly sells the land on June 10, 2018, for $48,000. What is her recognized gain or loss?

Mona purchased a business from Judah for $1,000,000. Judah's records and an appraiser provided her with the following information regarding the assets purchased: ​ What is Mona's adjusted basis for the land, building, and equipment?

If the fair market value of the property on the date of death is greater than on the alternate valuation date, the use of the alternate valuation amount is mandatory.