Donor's Cost Basis,

[ssteves]

MY wife was gifted some property from her mother and father.
Her father inherited this property his father.
We know the fair market Value on the date of the gift.
What would be the Donor's Cost Basis is it
0 since her father inherited the property from his father?

[CathiM]

Since your wife's father inherited the property, his cost basis (Donor's cost basis) is the FMV of the property on the date of his fathers death (not $0) or the alternative valuation date if the personal representative used that.  

You will have to do some research to find the FMV of the property on your wife's grandfathers date of death, but this gives you a "stepped up basis" in the property.