In 2013,Fran receives a birthday gift of stock worth $75,000 from her aunt.The aunt has owned the stock (adjusted basis $50,000)for 10 years and pays gift tax of $27,000 on the transfer.Fran's basis in the stock is $75,000-the lesser of $77,000 ($50,000 + $27,000)or $75,000.

Question

Quizplus · Accepted Answer

Fran's basis in the stock is the donor's adjusted basis ($50,000) plus a portion of the gift tax attributable to the appreciation, which is $9,000 ($27,000 * ($25,000 appreciation / $75,000 FMV)), making her basis $59,000, not $75,000.

In 2013,Fran Receives a Birthday Gift of Stock Worth $75,000