A real estate broker in California was gifted a piece of artwork from his uncle. The uncle purchased the artwork $12$ years ago for $$600,000.$ The uncle passed away $18$ months after gifting the art. The fair market value $($FMV$)$ of the artwork on the date of the uncle's death was $$1,200,000.$ The artwork is more valuable then sentimental to the taxpayer, so the taxpayer sold the art for $$1,300,000$ seven months after his uncle's death. The taxpayer read that gifts are not taxable to the recipient and therefore the taxpayer doesn't expect to pay tax on the $$1,300,000$ of proceeds.

For your initial post, address the following:

What income tax consequences will the taxpayer have, including the amount taxable, the character of any taxable amount, and any applicable tax rates?

What is inaccurate in the taxpayer's understanding of the taxability of gifts?

Do you think the uncle should have included the artwork in his estate instead of gifting the artwork? Why or why not?

How does this relate to the difference between capital assets and other assets