Question

Which o these sirualtions would folloe the gereneral rule for basis for inheritated property

A Louis died on August 12 2019, leaving his house to heis sister

B On August 15 2018, Leroy gave his brother Ralph appreciated stock. Leroy's brother Ralph died on February 16 2019. Ralph's only heir eas Leroy.

C Mark died on June 30 2019. He named his brother Emmett as the beneficiary of his 401(k) plan

D Kanet died on January 1 2019. At that time, she had an IRA with a balance of $32640. She named her daughter, Emily, as the beneficiary of her IRA

Answer 1

A is the correct option. The sister's basis in the house will be the fair market value of the house at the date of inheritance

General rule states that the inheritor's basis in the inherited property will be stepped up/stepped down to the fair market value of the inherited property at the time of inheritance

B is incorrect as assets that are inherited by taxpayer within 1 year of being previously gifted by the inheritor are not eligible for step up/step down in the basis

C is incorrect as 401(k) is not eligible for step up/step down in basis at the time of inheritance

D is incorrect as IRA is not eligible for step up/step down in basis at the time of inheritance