Morrison received a gift of income-producing property with an adjusted basis of $50,000 to the donor and a fair market value of $40,000 on the date of the gift (December 31, 2017). The donor paid a gift tax of $1,000 . Morrison sells the property on September 17, 2018 for $45,000 . What is the gain or loss on the property?
No gain or loss is recognized on the sale. The gain basis is $50,000 (no adjustment for gift taxes since there is no appreciation in the value of the property) and the loss basis is $40,000 . Since the selling price was in between the two, no gain or loss is recognized.
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