See Special Enrollment Exam Quiz
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SEE PART 1: INDIVIDUALS
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Which of the following is correct regarding the basis of property acquired by gift and later sold by the donee?
A
The donee's basis is always the donor's adjusted basis, increased by any gift tax paid, regardless of the fair market value on the date of the gift.
B
The donee's basis is always the fair market value on the date of the gift for purposes of computing both gain and loss, because a gift is a completed transfer.
C
If the amount realized on a later sale is between the donor's adjusted basis and the lower gift-date fair market value, the donee recognizes gain or loss measured from the gift-date fair market value.
D
If the gift-date fair market value is less than the donor's adjusted basis, the donee uses the donor's basis for gain and the gift-date fair market value for loss.
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