Kathleen received land as a gift from her grandfather. At the time of the gift, the land had a FMV of $105,000 and an adjusted basis of $85,000 to Kathleen's grandfather. The grandfather did not have any gift taxes due. One year later, Kathleen sold the land for $110,000. What was her gain or (loss) on this transaction?
A) no gain or loss
B) ($5,000)
C) $20,000
D) $25,000
D) $25,000
The donee normally assumes the donor's basis in gifted property. $110,000 amount realized - $85,000 gift basis = $25,000 gain.
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