Bill Farmer bought 1,000 acres of farmland for $300,000. When his oldest son married, Bill gave him 400 acres for a farm. When Bill died this year, the remaining 600 acres were divided in Bill’s will between his two younger sons. The 600 acres had a fair market value at Bill’s death of $600,000. Which of the following statements concerning the sons’ basis in the farmland are correct?

  1. The oldest son will have a basis of $120,000 in the 400 acres.
  2. The younger sons will have a basis of $180,000 in the 600 acres.
  3. The younger sons will have a basis of $600,000 in the 600 acres.
  4. The oldest son will have a basis of $400,000 in the 400 acres.
  1. (1) and (2) only
  2. (1) and (3) only
  3. (2) and (4) only
  4. (3) and (4) only