Gift property (disregarding any adjustment for gift tax paid by the donor):
a. Has no basis to the donee because he or she did not pay anything for the property.
b. Has the same basis to the donee as the donor's adjusted basis if the donee disposes of the property at a gain.
c. Has the same basis to the donee as the donor's adjusted basis if the donee disposes of the property at a loss, and the fair market value on the date of gift was less than the donor's adjusted basis.
d. Has no basis to the donee if the fair market value on the date of gift is less than the donor's adjusted basis.
e. None of the above.
The gift tax is a tax paid by the donor of certain gifts that would have otherwise been taxable as estate tax when transferred at death. The recipient of a gift does not have to pay gift tax or report income on the receipt of a gift, which is also true of a recipient of inheritance.
Answer and Explanation: 1
If a donee disposes of gifted property at a gain, the donee's basis in the gifted property is the same as the donor's adjusted basis in the property...
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fromChapter 10 / Lesson 9
Estate planning is the process of making a plan for asset distribution after death. Explore the taxes, trusts, and gifts involved in estate planning and learn about assets, wills, and beneficiaries.