My mother-in-law gifted some waterfront property to my wife . When we sell it, what would be the tax basis?
If the fair market value of the property at the time of the gift is less than your mother-in-law's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. Your basis for figuring gain is the same as the donor's adjusted basis. Your basis for figuring loss is its fair market value when you received the gift.
If the fair market value of the property is equal to or greater than your mother's adjusted basis, your basis is the donor's adjusted basis at the time you received the gift. Increase your basis by all or part of any gift tax paid, depending on the date of the gift.
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