Question

robert and diane, husband and wife, live in pennsylvania, a common law state. they purchased land as joint tenants in 2019 for $300,000. in 2023, diane dies and bequeaths her share of the land to robert. the land has a fair market value of $450,000. what is robert's adjusted basis for the land?

Answer 1

Robert's adjusted basis for the land after Diane's death is the current fair market value of $450,000 due to the stepped-up basis provided by the right of survivorship in a joint tenancy.

Step-by-step explanation:

Robert's adjusted basis for the land after Diane's death in a common law state like Pennsylvania can be understood through the concept of stepped-up basis. Since they held the property as joint tenants, upon the death of Diane, the entirety of the property would pass to Robert, including her half, by right of survivorship.

However, for tax purposes, Robert benefits from a stepped-up basis. The entire property's value is reassessed at its current fair market value. Therefore, for tax calculations, Robert's new adjusted basis for the entire property would be the market value at the time of Diane's death, which is $450,000.