Joycelyn gave a diamond necklace to her granddaughter Emma.Joycelyn had purchased the necklace in 1980 for $15,000.The FMV of the necklace at the time of the gift was $44,000.After deducting the annual exclusion,the amount of the gift was $30,000.Gift taxes of $10,000 were paid.What is Emma's adjusted basis in the necklace?

Question

Quizplus · Accepted Answer

B)Emma's basis is the sum of her grandmother's basis in the property plus the share of the gift tax attributable to the appreciation as of the gift date.$15,000 + [$10,000 × ($44,000-15,000)/ $30,000)= $24,667.

Joycelyn Gave a Diamond Necklace to Her Granddaughter Emma