Your client, Sherman Simmons, purchased stock for $120,000 in 2000. He died 6 months ago (2019) and left all of his property to his wife, Sylvia. The FMV of the stock on the date of death was $70,000. The stock value on the alternate valuation date was $80,000. If Sylvia sells the stock on the alternate valuation date, what will be the income tax result?

Question

Business

Isabelle Kirby

24 April, 18:05

Your client, Sherman Simmons, purchased stock for $120,000 in 2000. He died 6 months ago (2019) and left all of his property to his wife, Sylvia. The FMV of the stock on the date of death was $70,000. The stock value on the alternate valuation date was $80,000. If Sylvia sells the stock on the alternate valuation date, what will be the income tax result?

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Esperanza Kemp · Answer 1

long term gain incure = $10,000

Explanation:

given data

purchased stock = $120,000

stock on the date of death = $70,000

stock value on the alternate valuation date = $80,000

solution

as per given Sherman passed and all of property left for his wife under marital deduction

Because there no federal tax is applicable

so that sylvia basis will be FMV date of death as gain

gain will incure = proceeds amount - basis ... 1

gain incure = $80,000 - $70,000

gain incure = $10,000