Question

Ashley inherited all of the property of her aunt, who died in 2019. Her aunt's adjusted basis for the property at the date of death was $4,200,000. The property's fair market value was $6,500,000 at the date of death and $6,800,000 six months after the date of death.

Answer 1

The question deals with the adjusted basis and fair market value of property inherited by Ashley. It involves tax-related concepts such as estate tax, stepped-up basis, and property equity. Similar examples of property transactions are given to explain the concept of equity.

Step-by-step explanation:

The question pertains to an inheritance scenario where Ashley has inherited property from her aunt and is concerned with the property's adjusted basis and fair market value. Her aunt's adjusted basis in the property at the time of death was $4,200,000. The fair market value was $6,500,000 at the date of death and rose to $6,800,000 six months later. This situation typically involves understanding concepts such as stepped-up basis, estate tax, and capital gains tax, which are relevant when assessing the value of inherited property for tax purposes.

For comparison, examples are given regarding two other property transactions: Freda's house, which increased in market value, and Ben's house, where the value has increased and a portion of the bank loan has been paid off. These examples emphasize the concept of equity - the market value of the property minus what is owed on it.