GIFT TAX BASIS RULES

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Was FMV > or =to Cost? (1) (2)
n

Basis is Cost

Is Selling Price> Cost?

Is Selling Price> FMV?

Basis is ·YES -Selling Price NO-Basis is FMV

(1) FMV

=Fair Market Value at the time of gift

(2) Cost is adjusted by the gift tax paid: a.) In full on pre 1977 gifts b.) For appreciated portion of post 1976 gifts