David gave property with a basis of $133,000 to Hannah when the property had a FMV of $100,000 and paid gift taxes of $8,000. If Hannah later sells the property for $140,000, Hannah's basis (to determine gain) in the property immediately before the sale is
A) $100,000.
B) $108,000.
C) $133,000.
D) $141,000.
C) $133,000.
There is a dual basis when the FMV is below the adjusted basis as of the date of gift. Because the property is sold at a gain, the adjusted basis as of the gift date is used, but there is no addition for gift taxes paid since the property has not appreciated at the date of gift.
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