In 2012, Bob Brown's aunt Barbara gave him a house. At the time of the gift, the house had a fair market value of $193,000, the taxable gift was $180,000, and his aunt's adjusted basis was $73,000. His aunt paid a gift tax of $30,000 on the house. What is Bob's basis in the house for purposes of determining gain?

Question

Quizplus · Accepted Answer

Bob would add $20,000 of the gift tax on to the aunt's basis of $73,000 to get $93,000. the $20,000 is computed by multiplying the $30,000 gift tax by a fraction the numerator of which is the $120,000 appreciation and the denominator is the $180,000 taxable gift.

In 2012, Bob Brown's Aunt Barbara Gave Him a House