Ed and Cheryl have been married for 27 years. They own land jointly with a basis of $300,000. Ed dies in 2019, when the fair market value of the land is $500,000. Under the joint ownership arrangement, the land passed to Cheryl.
a.
?
If Ed and Cheryl reside in a community property state, what is Cheryl’s basis in the land? b.If Ed and Cheryl reside in a common law state, what is Cheryl’s basis in the land?
What will be an ideal response?
| a. | Cheryl's basis in the land is $500,000 ($250,000 + $250,000). |
| b. | Cheryl's basis in the land is $400,000 [($300,000 × 50%) + $250,000]. |
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