Charlie owns a tract of undeveloped land held as an investment that has an adjus
ID: 2436496 • Letter: C
Question
Charlie owns a tract of undeveloped land held as an investment that has an adjusted basis to Charlie of $145,000. If Charlie sells the land to his son, Otis, for $105,000, the fair market value of the property, which of the following is a correct statement as to Otis’ basis in the land?
a. Otis’ basis in the land is $105,000.
b. Otis’ basis in the land is $105,000 provided that Otis does not sell the land within two years after the date that the land is transferred to Otis.
c. Otis’s basis in the land is $145,000.
d. None of the above is correct since this transfer is considered part gift part sale.
Explanation / Answer
Option (a) that otis basis in land is $105000
As sale has been made by charlie to his son otis for $105000 and
son would also not be considered as relative in relative definition under gift provisions.