Rose dies with passive activity property having an adjusted basis of $127,600, suspended losses of $40,832, and a fair market value at the date of her death of $178,640.

The basis for the property is stepped-down to $; therefore, none of the $40,832 suspended loss is deductible on Rose's final return or by the beneficiary.

Rose dies with passive activity property having an adjusted basis of $65,000, suspended losses of $13,000, and a fair market value at the date of her death of $90,000.

The basis for the property is stepped-up to $; therefore, none of the $13,000 suspended loss is deductible on Rose's final return or by the beneficiary.