Lucy Dies Owning a Passive Activity with an Adjusted Basis

Lucy dies owning a passive activity with an adjusted basis of $90,000.Its fair market value at that date is $145,000.Suspended losses relating to the property were $75,000.Which of the following statements is true?

A) The heir's adjusted basis is $145,000, and Lucy's final deduction is $20,000.
B) The heir's adjusted basis is $145,000, and Lucy's final deduction is $75,000.
C) The heir's adjusted basis is $90,000, and Lucy's final deduction is $75,000.
D) The heir's adjusted basis is $220,000, and Lucy has no final deduction.
E) None of the above.

Correct Answer:

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