@HarryW wrote:
Could you explain how is the cost basis calculated? Is it the cost basis of the donor or the fair market value at the time of the gift?
What if the cost basis of the donor is unknown?
Thank you!
The cost basis of a gift is the givers cost basis. If you cannot get that and don't have documentation to prove the cost basis then the IRS will assume that the cost basis is zero. That is why the giver of a gift that will have taxable gain when sold, should always provide the proof of cost basis when the gift is given, otherwise the entire amount will be taxable income.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
