Basis of Gifts and Inheritances
Tax basis of property received by a U.S. person by gift is the donor's tax basis of the property. If the fair market value of the property exceeded this tax basis and the donor paid gift tax, the tax basis is increased by the gift tax. This adjustment applies only if the recipient sells the property at a gain.
Tax basis of property acquired by inheritance (i.e., from a decedent) before 2010 is the fair market value at the date of death. However, certain alternative basis may be used at the election of the estate of the decedent. Property so acquired after 2009 is treated as if acquired by gift, but the basis is limited to fair market value.
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