Generally,The rule governing the basis of gifted assets is commonly referred to as the carry-over basis rule.
Generally, property received as a gift are calculated with respect to the original owner's cost basis in the property. In other words, when property is given, the recipient receives both the property and the property's cost basis.
Any gift of depreciated property will trigger the so-called dual basis rules under Section 1015(a).
Section 1015(a). This section states, in pertinent part, that for property acquired by gift, "the basis shall be the same as it would be in the hands of the donor...except that if such basis is greater than the fair market value of the property at the time of the gift, then for the purpose of determining loss the basis shall be such fair market value."
http://taxmap.ntis.gov/taxmap/faqs/faq_10-001.htm
If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deduction is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property.
When the property is transferred as a gift, while the previous owner is still alive, the previous owner's original basis is transferred to the new owner, who must apply the original basis when calculating the capital gains tax realized upon the new owner's eventual sale of the property.
Under federal gift tax rules, the recipient of a gift takes the donor's tax basis. So your capital gains tax basis will be whatever your mother's tax basis was immediately prior to the gift.
