Sale of Gifted Property

[dyne]

A gain upon the sale of property received as a gift is based upon comparing the donor's adjusted basis to the sales price. However if the fair market value of the property is less than the donor's basis, your basis depends upon whether you have a gain or loss when you dispose of the property. Your basis for figuring a loss is the fair market value when you received the gift. If you use the donor's basis to figure a gain and get a loss, and then use the fair market value to calculate a loss and have a gain, you have neither a gain nor loss.This
is difficult to explain and I have left out some details about gift tax and additions to basis, etc.

[taxea]

Is there a question that I am missing?

[dyne]

No question. Just a comment!

[Lion]

Gift

I thought the basis of a gift was the basis in the giver's hands right before giving the gift, not the FMV at the time of the gift. The basis of inherited property is the FMV on the DOD or alternate valuation date if chosen.

[JON]

The

value of a gift is the lower of the cost basis or fair market value at the time of the gift. If someone gifts an item where FMV is lower than basis in most cases you should have sold and gifted the cash. For personal property items you probably do not care as much. If you think the FMV is going to skyrocket quickly you may not care when gifted.

I do not think there is any limitation on taking a loss on property gifted to you at a correct FMV that was lower than basis. Remember, if personal property you never get loss on the sale no matter how valued.

[dyne]

I made an error in my first post at the top in that the first sentence was wrong. I thought
I was copying from IRS. gov. but I got it wrong. I have edited and corrected this first post.