How much income should the taxpayer report on the year three

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Problem 1: On March 1, Year 3, a taxpayer inherited 1,000 shares of Extra Corp., common stock, from a relative. The taxpayer's relative had paid $5,000 for the stock in Year 1. The fair market value of Extra Corp. stock on March 1, Year 3, the date of death, was $8,000 and increased to $11,000 six months later. The estate's executor elected the alternative valuation for estate tax purposes and distributed the stock six months after the date of death. How much income should the taxpayer report on the Year 3 tax return for the inherited Extra Corp. stock?

A. $0

B. $3,000

C. $5,000

D. $6,000

Reference no: EM132842412

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