For gift tax purposes the value of the gift is the FMV on the date of the gift. The basis of the gift comes into play when the property is sold. When the gift is disposed/sold the basis depends on whether the property is sold at a loss or a gain.
If the property is sold for a gain, the basis is the donor's adjusted basis plus a share of any gift tax paid plus any improvements over the years since the gift date.
If the property is sold at a loss then the basis is the "Lower" of FMV or donor adjusted basis plus the adjustments as noted above (gift tax paid, improvements).
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