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Hillary received a vacation cabin as a gift from her father in 2014. Her father’s adjusted basis in the cabin was $85,000 and the FMV of the cabin was $115,000 at the time of the gift. Hillary sold the cabin in 2022 for $185,000. What amount will Hillary use as a basis to figure her gain on the sale?
A. $115,000 the FMV at the time of the gift
B. $85,000 the fathers adjusted basis at the time of the gift
C. $185,000 the FMV at the time of the sale
D. $0 since she did not purchase the cabin she has no basis
E. None of these

Respuesta :

* Hillary received the cabin as a gift from her father in 2014

* At the time of the gift, her father's adjusted basis in the cabin was $85,000 and the fair market value (FMV) was $115,000

* When receiving a gift, the recipient's basis is the same as the adjusted basis of the person who gave them the gift. So Hillary's basis would be $85,000 - her father's adjusted basis

* In 2022, Hillary sold the cabin for $185,000

* To calculate her gain, Hillary would use her basis of $85,000, not the FMV at time of gift, sale price, or $0

* Therefore, the amount Hillary would use as her basis to figure the gain on the sale is $85,000 - her father's adjusted basis at the time of the gift

The answer is B. $85,000 the father's adjusted basis at the time of the gift

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