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Get your taxes done using TurboTax
@Nancy1010 wrote:
So what is the adjusted basis for the donor? Is it $5000, what they paid for the property? How is the adjusted basis for the donor different than the basis for the donor?
If this was real property (real estate), the adjusted basis would include any improvements (if you know their cost) and you must subtract any depreciation (although depreciation can't be claimed on land itself, only on structures attached to the land).
In some cases, your parents might have chosen to capitalize their carrying costs, such as property taxes and other fees, instead of deducting them. Capitalizing the carrying costs must be done by attaching a written statement to their tax return for each year that they capitalized costs. If they capitalized costs and can show you the tax returns, that will also increase the adjusted basis.