Question

On July 31, 2018, Jessica-Anne received land and a building from Janice as a gift. Janice's adjusted basis and the fair market value at the date of the gift are as follows:

Asset	Adjusted Basis			FMV
Land	$200,000			$260,000
Building	640,000			700,000

Janice paid gift tax of $60,000 on the transfer.

Round any division to four decimal places. Round your final answers to the nearest dollar.

a. Determine Jessica-Anne's adjusted basis for the land and building.

Jessica-Anne's total basis for the assets received from Janice is $.

Jessica-Anne's adjusted basis for the land is $.

Jessica-Anne's adjusted basis for the building is $.

Answer 1

ANSWER

Adjusted Basis for jessica = janice Basis + [Appreciation/Market Value * Gift Tax]

Adjusted Basis of Land = $200,000 + [($260,000-$200,000) / ($260000*$60,000)]

=$200,000 + 13846.15 = $213846.15

Adjusted Basis of Building =

$640000 )+ [($700,000-$64,000/$700,000*$60,000]

= $640000 + $5142.85 = $645142.85

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