I am not the original poster, but perhaps I can clarify the difference between "sold" and "gifted," as I would love to know the answer to the poster's question. If real property (e.g., a rental house) is sold at a discount to a related party such as a son or daughter, the transaction is a sale but the difference between fair market value and the sales price is a partial "gift of equity." For example, if investment property with a tax basis of $220,000 and a fair market value of $400,000 is sold to a related party (e.g., son or daughter) for $320,000, the $80,000 price discount ($400,000 - $220,000) is a gift of equity that must be reported on Form 709 (gift tax return), but like the original poster, I have no idea what the "donor's adjusted basis of gift" would be for Form 709 purposes. Maybe zero? Questions are as follows:
1. Does the taxpayer/donor have a taxable gain of $100,000 in this example (= $320,000 - $220,000)?
2. On Form 709 (gift tax) what is the "basis" of the "gift of equity" representing the $80,000 price discount? Zero?
3. Is the donee's (recipient's) basis in the property equal to the purchase price of $320,000?
Many thanks
Stephen61
