Question

Discussion Question 13-11 (LO. 3)

Robin inherits 1,000 shares of Wal-Mart stock from her aunt in 2017. According to the information received from the executor of her aunt's estate, Robin's adjusted basis for the stock is $55,000. Albert, Robin's fiancé, receives 1,000 shares of Wal-Mart stock from his uncle as a gift in 2017. His uncle tells Albert that his adjusted basis for the Wal-Mart stock is $7,000.

What could cause the substantial difference in the adjusted basis for Robin's and Albert's respective 1,000 shares of Wal-Mart stock?

For inherited property, the basis for the heir is the . For property received by gift, the basis for the donee is the .

Answer 1

What could cause the substantial difference in the adjusted basis for Robin's and Albert's respective 1,000 shares of Wal-Mart stock?

Asset received as Inheritance and Asset received as gift could cause the substantial difference in the adjusted basis for Robin's and Albert's respective 1,000 shares of Wal-Mart stock.

For inherited property, the basis for the heir is the Fair market value at date of death or elected alternate valuation date. For property received by gift, the basis for the donee is the Donar's rollover cost.