If I received house via quit claim deed and father purchased it for40,000 and I sold it for $20,000 installment sale, then what is the basis, how is the sale reported?

[Hal_Al · Accepted solution]

The cost basis is the fair market value (FMV) on the date of the gift.

The general rule is that the giver's cost basis transfers to the gift recipient. But there is an exception if that cost basis results in a loss, when the property is sold. Then you must use the FMV