Dale gave property with a basis of $16,000 to Sarah when it had a FMV of $12,000.No gift taxes were due.Sarah later sold the property for $22,000 resulting in a recognized gain of
A)$0.
B)$4,000.
C)$6,000.
D)$12,000.

Question

Quizplus · Accepted Answer

The basis for Sarah is the same as Dale's basis since the FMV at the time of the gift was less than the basis. Therefore, Sarah's basis is $16,000. The gain is calculated as the selling price ($22,000) minus the basis ($16,000), resulting in a gain of $6,000.

Dale Gave Property with a Basis of $16,000 to Sarah