You Make the Call Please note that the question and answer provided does not take into account all options or circumstances possible. This weeks question is brought to you by Cindy Hockenberry, EA, from our Tax Knowledge Center. March 20, 2014 Question: James sold a home to his son Matthew for $200,000. The fair market value of the home at the time of the sale was $300,000 and James’s adjusted basis was $175,000. What is Matthews basis when the property is received through a part sale/part gift transaction? Answer: Matthew’s adjusted basis is the larger of James’s adjusted basis or the amount paid for the property. Matthew’s basis is $200,000 since that is what he paid for the home and is larger than Jamess adjusted basis of $175,000. James will report a gain of $25,000 and a gift of $100,000 [Reg § 1.1015-4(a)].
Posted on: Thu, 20 Mar 2014 22:10:30 +0000
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