The carryover basis to a donee for property received by gift can be an amount greater than the donor's adjusted basis.

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When a person gifts property to a donee, the donee's basis in the gifted property is usually the same as the donor's adjusted basis. However, under certain circumstances, the donee's basis can be higher than the donor's adjusted basis. This is referred to as a "carryover basis" and can occur when the fair market value of the gifted property at the time of the gift is greater than the donor's adjusted basis. In such a case, the donee's basis is equal to the fair market value of the property at the time of the gift.

The Carryover Basis to a Donee for Property Received by Gift