Asked by Andrews Osei antwi on Jul 15, 2024
Verified
Which of the following statements is incorrect regarding the gain or loss from the sale of property received as a gift?
A) If the FMV is equal to or more than the donor's adjusted basis,the basis for any gain or loss on a sale is the donor's adjusted basis.
B) If the FMV is equal to or more than the donor's adjusted basis,the basis for any gain or loss on a sale is the FMV of the asset.
C) If the FMV is less than the donor's adjusted basis at the time of the gift,the basis for figuring the gain is the donor's basis.
D) If the FMV is less than the donor's adjusted basis at the time of the gift,the basis for figuring the loss is the FMV of the asset.
Donor's Adjusted Basis
The value used for tax purposes to determine the gain or loss when property is given as a gift, generally the cost basis of the donor at the time of the gift.
Fair Market Value
The price that property would sell for on the open market, between a willing buyer and a willing seller each having reasonable knowledge of all pertinent facts.
Gift
A transfer of property or assets from one individual to another without the expectation of payment or anything in return.
- Determine and utilize the correct foundation for assessing gains or losses on transactions involving gifted or bequeathed assets.
Verified Answer
NH
Nikki HetzellJul 17, 2024
Final Answer :
B
Explanation :
If the FMV is equal to or more than the donor's adjusted basis, the basis for any gain or loss on a sale is the donor's adjusted basis. However, if the FMV is less than the donor's adjusted basis at the time of the gift, the basis for figuring the gain is the donor's basis and the basis for figuring the loss is the FMV of the asset. Therefore, statement B is incorrect.
Learning Objectives
- Determine and utilize the correct foundation for assessing gains or losses on transactions involving gifted or bequeathed assets.