Identify which of the following statements is true.
A)If the gifted property's FMV on the date of the gift exceeds its adjusted basis and the donor pays no gift tax, the donee's basis is the same as the donor's basis if the property is sold for a loss.
B)Prospective donors should not dispose of property that has declined in value by selling it rather than gifting it.
C)A $15,000 annual exclusion per donee is available for both gift tax and estate tax purposes.
D)All of the above are false.

Question

Quizplus · Accepted Answer

If the gifted property's FMV on the date of the gift exceeds its adjusted basis and the donor pays no gift tax, the donee's basis is the same as the donor's basis if the property is sold for a loss. This is known as the carryover basis rule. Option B is false because it is more beneficial for prospective donors to sell property that has declined in value, as they can claim a tax deduction for the loss. Option C is false because the $15,000 annual exclusion per donee is only available for gift tax purposes, not estate tax purposes.

Identify Which of the Following Statements Is True