klbwwb said:
What is the name of your state? TX
My mom sold a property this year that was gifted to her by her father. This property was gifted to him also. She nor he, nor anyone has ever paid a gift tax on the property when it was received, and it was sold for 33,000. Is she going to have to pay capital gains on the property, and if so, does she use the value of the property the date it was gifted to her or when it was originally purchase...like over 50 years ago?
whew....here is the applicable code section. Basically, her basis is the basis of the person who gifted the property to her father. Therefore, she will be paying capital gains on the difference between the original gifter's basis, and the selling price.
SEC. 1015. BASIS OF PROPERTY ACQUIRED BY GIFTS AND TRANSFERS IN TRUST. Subsec.
(a) GIFTS AFTER DECEMBER 31, 1920.--
If the property was acquired by gift after December 31, 1920, the basis
shall be the same as it would be in the hands of the donor or the last
preceding owner by whom it was not acquired by gift, except that if such
basis (adjusted for the period before the date of the gift as provided in
section 1016) is greater than the fair market value of the property at the
time of the gift, then for the purpose of determining loss the basis shall
be such fair market value. If the facts necessary to determine the basis in
the hands of the donor or the last preceding owner are unknown to the donee,
the Secretary shall, if possible, obtain such facts from such donor or last
preceding owner, or any other person cognizant thereof. If the Secretary
finds it impossible to obtain such facts, the basis in the hands of such
donor or last preceding owner shall be the fair market value of such
property as found by the Secretary as of the date or approximate date at
which, according to the best information that the Secretary is able to
obtain, such property was acquired by such donor or last preceding owner.
