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)?
Yes I believe so, gift of equity is one of the first things I mention to them, what part do you think they aren’t understanding?
@Anonymous_ wrote:
@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.....
Not anything because I can’t get them to actually read any tax code. However let’s talk about that code again and make sure we are on the same page. If I am understanding this right it will be the sum of (1) and (2). Well for (1) the greater amount will be the amount paid which is going to be 200k because that is what the purchase price is right? And for (2) I have no idea what that is talking about because why would anyone ever pay gift tax unless they were insanely rich and generous?
