J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

5.17 Basis of Property You Inherited or Received as a Gift

Special basis rules apply to property you received as a gift or that you inherited. Gifts from a spouse are subject to the rules discussed in 6.7. If you are a surviving joint tenant who received full title to property upon the death of the other joint tenant, see 5.18.

Basis of Property Received as Gift

If the fair market value of the property equalled or exceeded the donor’s adjusted basis (5.20) at the time you received the gift, your basis for figuring gain or loss when you sell it is the donor’s adjusted basis plus all or part of any gift tax paid; see the gift tax rule below. Additional basis adjustments may be required for the period you held the property (5.20).

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Caution

Basis for Gift

The basis of gift property you receive generally depends on the donor’s basis. Make sure you get this information from the donor.

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If on the date of the gift the fair market value was less than the donor’s adjusted basis, your basis for purposes of figuring gain is the donor’s adjusted basis, and your basis for figuring loss is the fair market value on the date of the gift. Additional basis adjustments may be required for the period you held the property (5.20).

Did the donor pay gift tax?

If the donor paid a gift tax (39.2) on the gift to you, your basis for the property is increased under ...