In the current year, Andrew received a gift of property from his uncle. At the time of the gift, the property had a FMV of $115,000 and an adjusted basis to his uncle of $70,000. After deducting the annual exclusion, the amount of the gift was $100,000. Andrew's uncle paid a gift tax on the property of $24,000. What is the amount of Andrew's basis in the property?
A) $70,000
B) $80,800
C) $94,000
D) $115,000
B) $80,800
Andrew's basis is the sum of his uncle's basis in the property plus the share of the gift tax attributable to the appreciation as of the gift date. $70,000 + [$24,000 × ($115,000 - $70,000)/$100,000] = $80,800
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