Question

Robert and Diane, husband and wife, live in Pennsylvania, a common law state. They purchased land as joint tenants in 2014 for $300,000. In 2018, 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?

a. $300,000
b. $375,000
c. $450,000
d. $750,000
e. None of the above

Answer 1

Robert's adjusted basis for the land is $450,000.

Step-by-step explanation:

Robert's adjusted basis for the land would be $450,000 (option c). In a joint tenancy, when one tenant dies, the surviving tenant receives a step-up in basis for the deceased tenant's share of the property. This means that Robert's basis for Diane's share of the land is adjusted to its fair market value at the time of her death, which is $450,000. Therefore, Robert's adjusted basis for the land is $450,000.