If a husband and wife bought a house for $50,000 in the 60s and sold it for $300,000 after the husband died, how much of the profit is subject to capital gains tax?

The correct answer is that none of the profit is subject to capital gains tax due to the concept of the "step-up in basis" that applies when one spouse dies. When the husband died, the property received a step-up in basis to its fair market value at the time of his death. This means that the basis for calculating capital gains taxes is adjusted from the original purchase price of $50,000 to the value of the property at the time of the husband's death.

Assuming the house is worth $300,000 at the time of the husband's death and is then sold for that same amount, the couple’s adjusted basis in the property is now the fair market value of $300,000. Since the selling price equals the new basis, there would be no capital gain, and therefore, no capital gains tax liability on the sale.