In January 2008,Sid makes a gift of his beach house (basis of $112,000; fair market value of $412,000)to his aunt.As a result of the transfer,Sid pays a gift tax of $20,000.The aunt dies in December 2008,when the property is worth $420,000.Under the terms of the aunt's will,the property passes to Sid.Sid's income tax basis in the beach house is:

Question

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Under the one-year rule of § 1014(e),Sid's basis will be determined under the gift tax rules.His basis is $112,000 plus the gift tax attributable to the appreciation of $300,000 ($412,000 - $112,000).Thus,
 11ea7f05_2ec9_74f2_92e1_9580b4c3913d_TB4123_00 The basis for gain becomes $127,000 ($112,000 + $15,000).

In January 2008,Sid Makes a Gift of His Beach House