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 increased by the $25,000 of gift taxes paid by the uncle.

Question

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The niece's basis in the land is the uncle's original cost basis, not increased by the gift taxes paid. Gift taxes do not affect the recipient's basis in the property.

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