In June 2021, Karen transferred property with a $75,000 FMV and a $20,000 adjusted basis to Hal, her husband. Hal dies in March 2022; the property has appreciated to $85,000 in value by then. His gross estate is $1 million.
a. What is the amount of Karen’s taxable gift for 2021?
b. What gain would Hal have recognized if he sold the property for $95,000 in July 2021?
c. If Hal wills the property to Dot, his daughter, what basis would Dot have?
d. How would your answer to Part c change if Hal instead willed the property to Karen?
e. How would your answer to Part d change if Hal did not die until August 2022?