Gift Tax Question

[NotEasy]

(1) A lady gave a property to her two sons, 50% to each. Does she need to file a separate gift tax return for the gift to each son?

(2) That property was a gift to her by someone else many years ago. She said she knows the original purchase price of the property by the donor. How would you come up with her basis of the property?

[Bees Knees]

(1) You file one annual gift tax return for all gifts to all individuals during the year that exceed the annual exclusion amount.

(2) Since she received the property as a gift, her basis is the donor's basis at the time of the gift, plus any improvements she put into the property.

[NotEasy]

(2) Since she received the property as a gift, her basis is the donor's basis at the time of the gift, plus any improvements she put into the property.

She believes the donor did not file a gift tax return when the property was gifted to her. Should her gift tax return preparer now reports her basis of the property just based on what she remembers the donor has told her about the original purchase price? And what if she knows there were improvements made by the donor but she has not idea how much they had costed? Should she just ask the donor how much the improvements had costed and add the amount to the basis?

[Bees Knees]

Sometimes the rules require you to obtain information that is impossible to obtain. Just tell her to do the best job that she can to obtain the information you need to file the gift tax return for her. Obviously, you are not really going to know for sure what her basis is, as nobody bothered to keep records. Have her give you the best educated guess that she can, and don’t lose any sleep over this.