Gifted Property

[Dave]

I just need some clarification on this area.

Client came in today, transaction is as follows,

Father transferred property to son for a $1.00. This took place around four years ago.

In 2005, son sells property for 70,000.00

I would first determine what the father's adjusted basis was at the time of the transfer.
in order to calculate a gain or loss.

Does this report on the 4797 and then to the Schedule D?

Appreciate any advice on this ..........

[Gretel]

Yes, I agree. Basis is father's adjusted basis since this is a gift. Gift tax return should have been filed back then. Plus maybe some improvements son did.

If form 4797 depends on the kind of property. If business or rental then yes, this is where it it reported.

[veritas]

basis is determined on gift depending whether there is a gain or loss. Read The Tax Book.