Sage inherited a gold necklace from her grandfather. The original cost of the necklace was $4,000 and the fair market value when her grandfather died was $5,000. What is Sage's basis for the necklace?

Answer 1

In the case of inherited property, the recipient's basis is typically the fair market value (FMV) of the property at the date of the decedent's death. In this scenario, since the fair market value of the gold necklace at the time Sage's grandfather died was $5,000, that will be the basis for Sage.

Thus, Sage's basis for the necklace is $5,000.