Glad I covered myself by saying I hadn't researched it! I hope someone tells the son that his $52K "gift" comes with a potential tax hit against it, so it's really not a net $52K gift as actual cash would be. The parents have indeed transferred some of their potential tax liability to son. I presume the holding period also begins with date of purchase, so he doesn't even get LTCG if he were to dispose of the property in less than a year. On the other hand, a Sec 121 exclusion could offset the tax.