How do I put property that I was gifted and now selling on my tax return?

[itsweigel]

I sold 40 acres on land for $25,000 in cash on October 21, 2020; there was no commission. I received it as a wedding gift on Oct. 10 1994 from my wife’s parents. It was worth $20,000 on the date of the gift but they bought it for $12,000 in 1970.

[KrisD15]

Since you sold the property at a gain, and the Fair Market Value is higher than the donor's adjusted basis, you need to use the donor's adjusted basis, which would be 12,000, as your basis . 

You will need to claim 12,000 as your basis for the sale, unless you made improvements and/or unless your in-laws paid gift tax when they gifted it to you, which is possible but unlikely.  The gain on the sale will be reported as long term capital gains. 

IRS Pub 551

[itsweigel]

What if I don’t know the exact date it was purchased?

[BillM223]

"they bought it for $12,000 in 1970."

How do you know that they did this? Is this an approximation based on family lore?

You will want to do whatever research you need to do to determine the date of sale and the cost of sale. I say this because if the IRS does not accept your evidence, then they can set the basis to zero and charge you for the entire gain.

Contact whoever in your state handles land records and transactions. You may have to spend an afternoon at the County Records Office (in Texas, anyway) looking this up. You will not be the first person to have to do this.

Every penny you can reasonably demonstrate as part of the original cost is a penny you won't have to report as income.