Original cost + plus improvements, divided by three.
Gifted Property - The cost basis of property you received as a gift ("gifted stock") is determined by the giver's original cost basis and the fair market value (FMV) of the property at the time you received the gift.
- If the FMV when you received the gift was more than the original cost basis, use the original cost basis when you sell. This is the most commonly-encountered situation.
- If the FMV when you received the gift was less than the original basis, and you later sold the property for:
- More than the original basis: use the original basis.
- More than the FMV at the time of the gift, but less than the original basis: your selling price becomes the cost basis. You won't report a gain or loss in this situation.
- Less than the FMV at the time of the gift: use the FMV at the time of the gift.
Capital Gains
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