An uncle gifts a parcel of land to his niece,and he has to pay $25,000 of gift taxes.The land has appreciated substantially since he purchased it 20 year ago.The niece's basis in the land will be the uncle's cost plus the full $25,000 of gift taxes paid by the uncle.

Question

Quizplus · Accepted Answer

A donee's basis in gifted property generally starts with the donor's basis.In the case of appreciated gifted property,the law does allow the donee to increase the basis of the asset by gift taxes,but only by the portion of the gift taxes paid by the donor allocable to the appreciation.

An Uncle Gifts a Parcel of Land to His Niece,and