Question

Which of these situations would follow the general rule for basis of inherited property?

A. on august 23, 2021, giacamo gave his brother, rudolpho, appreciated stock. rudolpho died on february 16, 2022. rudolpho's only heir was giacomo.
B. larry died on june 30, 2022. he named his brother, cortez, as the beneficiary of his 401(k) plan.
C. melinda died on january 1, 2022. at that time, she had an ira with a balance of $32,640. she named her daughter, amelia, as the beneficiary of her ira.
D. yakub died on august 12, 2022, leaving his house to his sister, farah.

Answer 1

The correct answer is D, where Yakub leaves his house to his sister, Farah, correctly follows the general rule for the basis of inherited property, with the basis being the fair market value at the date of death.

Step-by-step explanation:

The general rule for the basis of inherited property typically states that the basis of the property is its fair market value at the date of the deceased’s death. Considering the provided scenarios would follow this general rule because it involves a situation where Yakub died and left his house to his sister, Farah. The fair market value of the house at the date of Yakub’s death would be the basis of the house for Farah.

Option A involves a gift of appreciated stock which does not pertain to a situation at the time of death and therefore may involve different tax rules such as carryover basis or gift tax considerations. Option B and C discuss beneficiary designations of retirement accounts, which have their own specific rules regarding distributions and basis that don't align with the general rule of inherited property at death.