LO.3 The portion of Earl’s estate distributed to Robert, one of Earl’s beneficiaries, is valued as follows:

Asset Earl’s Adjusted Basis FMV at Date of Death FMV at Alternate Valuation Date Cash $10,000 $ 10,000 $ 10,000 Stock 40,000 125,000 60,000 Apartment building 60,000 300,000 325,000 Land 75,000 100,000 110,000 Although the fair market value of the stock six months after Earl’s death turned out to be

$60,000, the executor of the estate distributed it to Robert one month after Earl’s death when it was worth $85,000. Determine Robert’s basis for the assets if:

a. The primary valuation date applies.

b. The executor elects the alternate valuation date.

DECISION MAKING