Harry inherited a residence from his mother when she died. The mother had purchased the residence 6 months prior to her death and had a tax basis of $566,000. When she died and the residence was worth $433,000 at the date of her death. Which of the statements below is correct?

1. Harrys new basis is $566,000 and includes his mothers holding period for the residence.
2. Harry will receive a new basis of $433,000 and continue with his mothers holding period for the residence.
3. Harry will receive a new basis of $433,000 and a new holding period for the residence which is automatically long term.
4. Harry will receive his mothers basis of $566,000 and a new long term holding period.