Dan bought a hotel for $2,600,000 in January 2011. In May 2015, he died andleft the hotel to Ed. While Dan owned the hotel, he deducted $289,000 of cost recovery. The fair market value in May 2015 was $2,800,000. The fair market value six months later was $2,850,000.a. What is the basis of the property to Ed?b. What is the basis of the property to Ed if the fair market value six months later was $2,500,000 (not $2,850,000) and the objective of the executor was to minimize the estate tax liability?
Dan bought a hotel for $2,600,000 in January 2011. In May 2015, he died andleft the hotel to Ed. While Dan owned the hotel, he deducted $289,000 of cost recovery. The fair market value in May 2015 was $2,800,000. The fair market value six months later was $2,850,000.a. What is the basis of the property to Ed?b. What is the basis of the property to Ed if the fair market value six months later was $2,500,000 (not $2,850,000) and the objective of the executor was to minimize the estate tax liability?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Dan bought a hotel for $2,600,000 in January 2011. In May 2015, he died and
left the hotel to Ed. While Dan owned the hotel, he deducted $289,000 of cost recovery. The fair market value in May 2015 was $2,800,000. The fair market value six months later was $2,850,000.
a. What is the basis of the property to Ed?
b. What is the basis of the property to Ed if the fair market value six months later was $2,500,000 (not $2,850,000) and the objective of the executor was to minimize the estate tax liability?
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