The recipient of a gift gets NO STEP UP IN BASIS TO FMV. Fair market value is irrelevant to a gift recipient (unless sold at a loss). The basis received in a gift is the giftors basis. A difficult proposition as it needs to be determined as if Dad sold his property in 1997 and was calculating his basis. THAT is what he gifted to the recipients.
Again - a gift gets no step up in basis. FMV is not to be used.
The basis of the remainder acquired at Date of Death is stepped up to FMV at DOD.
