The apocalypse continues unabated. On the bright side, your billings are increasing exponentially! Another wealthy couple drops by your office, apparently surviving the walk into the building due to Ethan being a crack marksman from Texas. Ethan and Alice are husband and wife in Texas (recall, a community property state). Their property includes the following: (see next page)

Stock investment Nature of Ownership Adj Basis FMV

Grey Stock Ethan’s Separate property $120,000 $70,000

White stock Community prop $380,000 $80,000

The separate property was inherited by Ethan from his father. When Ethan learns he has advanced cancer (which the zombies avoid like the plague), he transfers by gift to Alice his Grey stock and his community interest in the White stock. 

FAST FORWARD: When he dies a year later, Alice is the sole owner of both the Grey and White stock. (Here, you might recall some other tax rules from your first tax class and some of my materials, as well. Assume the FMV at death is approximate that shown of a year transferred.