26 U.S.C. § 1015 : US Code - Section 1015: Basis of property acquired by gifts and transfers in trust

Search 26 U.S.C. § 1015 : US Code - Section 1015: Basis of property acquired by gifts and transfers in trust

(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.
(b) Transfer in trust after December 31, 1920
If the property was acquired after December 31, 1920, by a
transfer in trust (other than by a transfer in trust by a gift,
bequest, or devise), the basis shall be the same as it would be in
the hands of the grantor increased in the amount of gain or
decreased in the amount of loss recognized to the grantor on such
transfer under the law applicable to the year in which the transfer
was made.
(c) Gift or transfer in trust before January 1, 1921
If the property was acquired by gift or transfer in trust on or
before December 31, 1920, the basis shall be the fair market value
of such property at the time of such acquisition.
(d) Increased basis for gift tax paid
(1) In general
If -
(A) the property is acquired by gift on or after September 2,
1958, the basis shall be the basis determined under subsection
(a), increased (but not above the fair market value of the
property at the time of the gift) by the amount of gift tax
paid with respect to such gift, or
(B) the property was acquired by gift before September 2,
1958, and has not been sold, exchanged, or otherwise disposed
of before such date, the basis of the property shall be
increased on such date by the amount of gift tax paid with
respect to such gift, but such increase shall not exceed an
amount equal to the amount by which the fair market value of
the property at the time of the gift exceeded the basis of the
property in the hands of the donor at the time of the gift.
(2) Amount of tax paid with respect to gift
For purposes of paragraph (1), the amount of gift tax paid with
respect to any gift is an amount which bears the same ratio to
the amount of gift tax paid under chapter 12 with respect to all
gifts made by the donor for the calendar year (or preceding
calendar period) in which such gift is made as the amount of such
gift bears to the taxable gifts (as defined in section 2503(a)
but computed without the deduction allowed by section 2521) made
by the donor during such calendar year or period. For purposes of
the preceding sentence, the amount of any gift shall be the
amount included with respect to such gift in determining (for the
purposes of section 2503(a)) the total amount of gifts made
during the calendar year or period, reduced by the amount of any
deduction allowed with respect to such gift under section 2522
(relating to charitable deduction) or under section 2523
(relating to marital deduction).
(3) Gifts treated as made one-half by each spouse
For purposes of paragraph (1), where the donor and his spouse
elected, under section 2513 to have the gift considered as made
one-half by each, the amount of gift tax paid with respect to
such gift under chapter 12 shall be the sum of the amounts of tax
paid with respect to each half of such gift (computed in the
manner provided in paragraph (2)).
(4) Treatment as adjustment to basis
For purposes of section 1016(b), an increase in basis under
paragraph (1) shall be treated as an adjustment under section
1016(a).
(5) Application to gifts before 1955
With respect to any property acquired by gift before 1955,
references in this subsection to any provision of this title
shall be deemed to refer to the corresponding provision of the
Internal Revenue Code of 1939 or prior revenue laws which was
effective for the year in which such gift was made.
(6) Special rule for gifts made after December 31, 1976
(A) In general
In the case of any gift made after December 31, 1976, the
increase in basis provided by this subsection with respect to
any gift for the gift tax paid under chapter 12 shall be an
amount (not in excess of the amount of tax so paid) which bears
the same ratio to the amount of tax so paid as -
(i) the net appreciation in value of the gift, bears to
(ii) the amount of the gift.
(B) Net appreciation
For purposes of paragraph (1), the net appreciation in value
of any gift is the amount by which the fair market value of the
gift exceeds the donor's adjusted basis immediately before the
gift.
(e) Gifts between spouses
In the case of any property acquired by gift in a transfer
described in section 1041(a), the basis of such property in the
hands of the transferee shall be determined under section
1041(b)(2) and not this section.