Question

Martha inherited a cottage from her father with a basis of $50,000 and a FMV of $78,000. When Martha died, her son, Noah, inherited the cottage, now worth $110,000. Which of the following statements is true? O Martha's basis was $78,000 and Noah's basis is $110,000.
O Martha's basis was $50,000 and Noah's basis is $78,000
O Martha's basis and Noa's basis remain at the original basis of $50,000.
○ If Noah sells the property, his basis is $110,000, but his basis for depreciation is S50.000.

Answer 1

Answer: Marthas Basis was $78000 and Noahs basis is $110000

Explanation:

Property appreciates over time when valuated every year periodically so they have evaluated the value of the cottage so if martha were to sell it in her times it would have been sold at a price of $78000 cause thats the fair market value of the cottage so now for noah if he decides to sell the cottage it will be valued at $110000 so he will have to sell it at that market price or above that market price to profit, the fair market value values a property on the basis of its value inclusive of inflation that have affected prices over the years.