@curiousminds wrote:
.....a CPA told me that the buyers cost basis will be the purchase price.
The CPA would be correct in the most common instances but wrong in this one. Was the CPA actually aware of the facts (i.e., the type of transaction)?
What, if anything did the CPA have to say about the following section in the treasury regulations for the purposes of determining a gain? There is no question that this is a part gift/part sale.
§ 1.1015-4 Transfers in part a gift and in part a sale.
(a) General rule. Where a transfer is in part a sale and in part a gift, the unadjusted basis of the property in the hands of the transferee is the sum of -
(1) Whichever of the following is the greater:
(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, and
(2) The amount of increase, if any, in basis authorized by section 1015(d) for gift tax paid.....
