31. Jacob makes a gift of property (basis of $100,000; fair market value of $500,000) to his aunt, Mary. Ten months later and when the property is worth $550,000, Mary dies. Under Mary’s will, the property passes to Isabella (Jacob’s wife). Isabella’s basis in the property is $550,000.
32. Jim makes a gift of property (basis of $800,000; fair market value of $600,000) to his wife, Molly. Six months later Molly dies, and under her will, the property (now worth $700,000) returns to Jim. Jim’s income tax basis in the property now is $800,000.
33. If a traditional IRA is subject to both estate and income taxes, a withdrawal by the heir constitutes income in respect of a decedent (IRD).