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basis_example_08[1] - of disposition and the donor's basis...

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Estate Planning Fall, 2008 Basis in Gifted Property Donor made a gift of stock to donee in 2003. Donee plans to sell the stock in 2008. How much gain or loss is realized in each of the following situations? Donor basis FMV when gifted Sale price a. $12,000* $10,000 $13,000 b. $12,000 $10,000* $ 9,000 c. $12,000 $10,000 $11,000 d. $ 8,000* $10,000 $ 9,000 * Basis for calculating reported gain or loss a. Realized gain of $1,000. Whenever the amount realized upon subsequent disposition exceeds the donor's adjusted basis in the asset, the donee's basis for determining the amount of gain will be the donor's basis. b. Realized loss of $1,000. If the difference between the value on the date
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Unformatted text preview: of disposition and the donor's basis is a loss, than the donee's basis for purposes of calculating the amount of loss realized is the lower of donor basis or the fair market value on the date of the gift. Note that the result is to produce the smallest loss possible in every situation. c. No gain or loss is realized. If the amount of the sales proceeds is between the basis for loss and the basis for gain, no gain or loss is realized. d. Realized gain of $1,000. Donor basis is applicable because the amount received on disposition exceeds donor basis....
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