In 1985, Tony and Rhonda acquired land for $600,000, with Tony furnishing $200,0
ID: 2501859 • Letter: I
Question
In 1985, Tony and Rhonda acquired land for $600,000, with Tony furnishing $200,000 and Rhonda $400,000 of the purchase price. Title to the property is listed as equal joint tenancy with right of survivorship. Tony died first in in the current year when the land was worth $3,000,000. What is Rhonda's income tax basis in the property under each of the following assumptions?
(I) Tony and Rhonda are brother-sister.
(II) Tony and Rhonda are husband and wife.
(III) Tony and Rhonda are husband and wife, and the land is community property.
Explanation / Answer
Answers
(I) Rhonda's Tax basis when Tony and Rhonda are brother-sister would be 3000000 i.e. fair market value of the property.
(II) Rhonda's tax basis in the property when Tony and Rhonda are husband and wife would be 50% of 3000000 = 1500000
(III) Rhonds's tax basis when Tony and Rhonda are husband and wife, and the land is community property is 3000000 i..e fair market value of the property.