Rob was given a residence in 2012.At the time of the gift, the residence had a fair market value of $200,000, and its adjusted basis to the donor was $140,000.The donor paid a gift tax of $10,000 on the taxable gift of $187,000.What is Rob's basis for gain?
A)$140,000.
B)$143,209.
C)$150,000.
D)$200,000.
E)None of the above.

Question

Quizplus · Accepted Answer

Rob's basis for gain is calculated by taking the donor's adjusted basis ($140,000) and adding any gift tax paid on the gift ($10,000), for a total of $150,000. However, because the gift was less than the fair market value of the residence at the time ($200,000), Rob's basis for loss is the same as the fair market value at the time of the gift, which is $200,000.

Rob Was Given a Residence in 2012