What is the cost basis of gifts of stock, home, or property?
Your cost basis of a gift is usually the same as the giver's basis, but the actual basis to report may depend on how the asset's value has changed over time.
If the asset's value increased between the time it was originally purchased and the time it was gifted to you, your basis will be the same as the giver's basis. For example, if your father gives you 100 shares of XYZ Corporation which he purchased 10 years ago for $3,000, then your cost basis will be the same as your father's ($3,000). Your date acquired would also be the same date your father purchased the stocks 10 years ago.
If an asset you received as a gift lost value from the giver's original basis (such as the stock your father originally purchased for $3,000 only being worth $1,000 when you received it), the rules are further complicated depending on whether you report a gain or a loss on the sale. If you later sold the assets for no gain (sold for $1,000), or a loss (sold for less than $1,000), you would use the fair market value on the date you received it ($1,000) as your basis.
If the asset's value rebounded and increased somewhat, but was still sold for lower than the giver's basis (for example you sold the above assets for $2,000), your basis will be the same as the sale price so that you report neither a gain nor a loss.
Lastly, if the asset's value increased beyond the giver's basis, you would again use that original basis as your basis to report gains. For example, if you sell the stock your father gave you 4 years later for $4,000 your cost basis would be the value when your father purchased it ($3,000) resulting in a reported gain of $1,000.
If the asset's value increased between the time it was originally purchased and the time it was gifted to you, your basis will be the same as the giver's basis. For example, if your father gives you 100 shares of XYZ Corporation which he purchased 10 years ago for $3,000, then your cost basis will be the same as your father's ($3,000). Your date acquired would also be the same date your father purchased the stocks 10 years ago.
If an asset you received as a gift lost value from the giver's original basis (such as the stock your father originally purchased for $3,000 only being worth $1,000 when you received it), the rules are further complicated depending on whether you report a gain or a loss on the sale. If you later sold the assets for no gain (sold for $1,000), or a loss (sold for less than $1,000), you would use the fair market value on the date you received it ($1,000) as your basis.
If the asset's value rebounded and increased somewhat, but was still sold for lower than the giver's basis (for example you sold the above assets for $2,000), your basis will be the same as the sale price so that you report neither a gain nor a loss.
Lastly, if the asset's value increased beyond the giver's basis, you would again use that original basis as your basis to report gains. For example, if you sell the stock your father gave you 4 years later for $4,000 your cost basis would be the value when your father purchased it ($3,000) resulting in a reported gain of $1,000.
