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Jill's will states in part "I devise the sum of $10,000 to Mary.
Jill's will states in part "I devise the sum of $10,000 to Mary." The personal representative of Jill's estate, being short of cash, distributes 100 shares of XYZ corporation to Mary in satisfaction of her devise. On date of distribution the 100 shares of XYZ have a fair market value of $10,000. The estate's basis in the stock is $5,000. This transaction results in
a.realization and recognition of $5,000 capital gain by the estate.
b.Mary will be taxed on ordinary income of $5,000 assuming there is enough taxable DNI to cover this amount.
c.Mary will be taxed on ordinary income of $10,000 assuming there is enough taxable DNI to cover this amount.
d.Mary will not be taxed because she received specific property , i.e., the XYZ stock, instead of cash.
