Problem
I. Al owns stock with an adjusted basis of $13,000 and a fair market value of $24,000.He gives the stock to Mary, his sister, on July 1, 2021. Mary is suffering from terminal cancer. When Mary dies, the fair market value of the stock is $26,000. Mary's will provides that Al is to receive the stock.
i. What is Al's basis in the stock if Mary dies on June 1, 2022?
ii. What is Al's basis in the stock if Mary dies on August 1, 2022?
II. Bob inherited some land from his father in February, 2021. The land was the bulk of his father's estate and had been held for investment. Bob's father had an A/B in the land of $500,000. Its FMV at the time of his death was $1,200,000. Six months after his death, the value was $1,250,000. Bob sold the land in November, 2021 for $1,300,000.
i. What is Bob's A/B in the property?
ii. What is the realized and recognized gain?
iii. What is the character of the gain? (i.e. long-term or short-term)