This year, 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 $50,000, the donor's adjusted basis, because the gift tax paid does not increase the basis unless the fair market value at the time of the gift is greater than the donor's basis.

This Year, Fran Receives a Birthday Gift of Stock Worth