Dan bought a hotel for $2,600,000 in January 2010. In May 2014, 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 2014 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?

If the alternate valuation date _can be/cannot be______ elected by the executor, Ed's basis for the hotel _____would be/would not be$. A key _resolved/unresolved_____ issue is whether the election __would reduce/would not reduce________ the amount of the estate tax liability.