The National Directory of Certified Public Accountants

Ask A CPA - Gifts

Gifts - Basis Of Property

Generally, the basis to the donee is the same as in the hands of the donor at the date of the gift. To figure the basis of property you get as a gift, you must know its adjusted basis to the donor just before it was given to you. You also must know its fair market value (FMV) at the time it was given to you and any gift tax paid on it. The basis to determine if there is a loss on the sale of a gift is the value as in the hands of the donor at the date of the gift or the fair market value Whichever is lower. There is no gain or loss on a sale of a gift when the selling price is less than the basis for the gain and more than the basis for the loss calculation. The basis of property received is increased by the amount of gift tax attributable to the net appreciation in value of the gift. The net appreciation is the amount by which the fair market value of the gift exceeds the donor's adjusted basis immediately before the date of the gift.

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