Because of the "Double Basis Rule" (where FMV is less than the adjusted basis on the date of the gift), Laura will not have any taxable gains or losses on the sale of the collection if she receives between $15,000 and $20,000 for the sale.
New Basis = Original Cost + [(Appreciation / FMV) x Gift tax]
$27,500 = $20,000 + [($60,000 / $80,000) x $10,000]
3. B Under the "Death Bed Gifting Rule," gifted property received back in one year, or less, by the donor does not receive a "step up" to FMV. Instead, the basis reverts back to the original donor's adjusted basis.
Because Pete and Pat owned the account as "community property," Pat receives a full "step up" to FMV on both halves of the account at the death of the first spouse.
All of the actions listed above (except legal fees incurred), will be considered capital improvements and increase his original basis. Legal fees incurred for defending or perfecting titles are considered additional items to basis.
InsightsHere's a look at how much you should spend and what you should give this holiday season.
InsightsAn unbelievable amount of money gets wasted in the form of non-redemption: nearly $5 billion a year. These tips will ensure that your gift card gift doesn't go to waste.
InsightsGift cards have many benefits for retailers compared to cash sales. We'll look at a few of them.
TaxesThe lifetime maximum for gift taxes is $5.12 million. However, it could drop to $1 million. Here's what that will mean.
InsuranceYour life insurance policy can be a great tool for charitable giving. Find out how.
Personal FinanceGift cards can cost less when you buy them through a discount website. Just do the math before you cough up the cash.
Personal FinanceTalking Christmas gift budgets with family members can be hard, but having the talk will help you stay on track financially.
InsightsFinding a gift for a new boyfriend or girlfriend, your boss, or the postman can sometimes be a challenge.
Managing WealthIn any transaction between a buyer and seller, the initial price paid in an exchange for a product or service will qualify as the cost basis. When it comes to securities and related financial ...
TaxesTaxes are often a deterrent from investing and saving. These financial practices will bring you no tax grief.