Chapter 10: Basis Rules, Depreciation, and Asset Categorization

01.Core Concepts

• If FMV of gifted property < the donor’s adjusted basis on the date of the gift, the double basis rule applies to the donee. • To determine a loss, the adjusted basis of the donee is the FMV of the property on the date of gift. • To determine a gain, the basis of the donee is the adjusted basis of the donor. • If the donee sells the property for an amount that is between the gain and the loss basis, no gain or loss is recognized.