Community property state and common law state


Question: Ed and Cheryl have been married for 27 years. They own land jointly with a basis of $140,000. Ed dies in 2008, when the fair market value of the land is $220,000. 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?

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Accounting Basics: Community property state and common law state
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