Holding Period Practice Test

If a gift of property has a fair market value below the donor’s basis, what is the basis and the holding period of the gift to the recipient?

A taxpayer inherited property from a deceased relative. The fair market value at the date of death was $20,000. An alternative valuation date was elected by the executor of the estate. The property was worth $18,000 six months later and was worth $24,000 when it was distributed to the taxpayer 9 months later. It had a cost basis to the deceased of $4,000. If the beneficiary sold the property for $23,000, what would be the recognized gain by the taxpayer and the nature of the gain?