Dan bought a hotel for $2,600,000 in January 2019. In May 2023, 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 2023 was $2,800,000. The fair market value six months later was $2,850,000. Assume that an estate tax return (Form 706) is not required to be filed.

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?