Question

Todd agreed to purchase his mom's house at the fair market value of $180,000. Since his...

Todd agreed to purchase his mom's house at the fair market value of $180,000. Since his mom wasn't in great health, they decided to use a Self Cancelling Installment Note (SCIN) to structure the sale. Under the terms of the SCIN, Todd was to pay his mother $1,500/month for 10 years.

Todd’s mother died 13 months later. Todd had made payments totaling $19,500. At the time of her death the fair market value of the house was $230,000. What is Todd’s basis in the home? Pick an option and explain.

  

a. $19,500

b. $230,000 (test answer)

c. $180,000

d. $0

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