@mrmood6007
if I use this statement from your source:
The Greater of:
(i) The amount paid by the transferee for the property, or
(ii) The transferor's adjusted basis for the property at the time of the transfer,
The amount paid by the transferee (you) for the property is $385,000 (The purchase price less the gift)
The transferor's (your parent's) adjusted basis for the property at the time of transfer: $200,000
since it is the greater of those two figures, then $385,000 is the cost basis, which is what @Opus 17 determined
To that $385,000 cost basis, the cost of the escrow agent and title can be added to that (that is imbedded in the $11,000 additional loan), the reserves for taxes and insurance are not part of the equation.
Note that 'cost basis' (or capital gains for the same reason) never includes the debt (the loans), it's always about the assets.
