26 C.F.R. § 1.1015-4

Transfers in part a gift and in part a sale

Read at: eCFRecfr.gov CornellLII GovInfogovinfo.gov CasesGoogle Scholar

(a) General rule. Where a transfer of property is in part a sale and in part a gift, the unadjusted basis of the property in the hands of the transferee is the sum of—

(1) Whichever of the following is the greater:

(i) The amount paid by the transferee for the property, or

(ii) The transferor's adjusted basis for the property at the time of the transfer, and

(2) The amount of increase, if any, in basis authorized by section 1015(d) for gift tax paid (see § 1.1015-5).

For determining loss, the unadjusted basis of the property in the hands of the transferee shall not be greater than the fair market value of the property at the time of such transfer. For determination of gain or loss of the transferor, see § 1.1001-1(e) and § 1.1011-2. For special rule where there has been a charitable contribution of less than a taxpayer's entire interest in property, see section 170(e)(2) and § 1.170A-4(c).

(b) Examples. The rule of paragraph (a) of this section is illustrated by the following examples:

Example 1.If A transfers property to his son for $30,000, and such property at the time of the transfer has an adjusted basis of $30,000 in A's hands (and a fair market value of $60,000), the unadjusted basis of the property in the hands of the son is $30,000.Example 2.If A transfers property to his son for $60,000, and such property at the time of transfer has an adjusted basis of $30,000 in A's hands (and a fair market value of $90,000), the unadjusted basis of such property in the hands of the son is $60,000.Example 3.If A transfers property to his son for $30,000, and such property at the time of transfer has an adjusted basis in A's hands of $60,000 (and a fair market value of $90,000), the unadjusted basis of such property in the hands of the son is $60,000.Example 4.If A transfers property to his son for $30,000 and such property at the time of transfer has an adjusted basis of $90,000 in A's hands (and a fair market value of $60,000), the unadjusted basis of the property in the hands of the son ins $90,000. However, since the adjusted basis of the property in A's hands at the time of the transfer was greater than the fair market value at that time, for the purpose of determining any loss on a later sale or other disposition of the property by the son its unadjusted basis in his hands is $60,000.[T.D. 6500, 25 FR 11910, Nov. 26, 1960, as amended by T.D. 6693, 28 FR 12818, Dec. 3, 1963; T.D. 7207, 37 FR 20799, Oct. 5, 1972]

Notes of Decisions

Cited in 9 cases, 1961–2016 · leading case: Kovacs v. Comm'r, 100 T.C. 124 (Tax Ct. 1993).

Sort: Relevance Newest Treatment

Kovacs v. Comm'r, 100 T.C. 124 (Tax Ct. 1993). · cites it 2× “Compare sec. 1.1011-2, Income Tax Regs. with sec.”

Vaira v. Comm'r, 52 T.C. 986 (Tax Ct. 1969). · cites it 2× “A somewhat similar question has presented difficulties in the area of acquisitions by gift, where, however, a specific regulation was involved, there was a statutory provision providing for an additive to basis of a portion of the gift tax paid, and there was evidence presented…”

Coates v. Comm'r, 2016 T.C. Memo. 197 (Tax Ct. 2016). · cites it 6× “If the property was acquired by gift, the basis is the donor's basis, except that if the donor's basis is greater than the fair market value of the property at the time of the gift, then for determining loss the basis is the fair market value.”

Turner v. Comm'r, 49 T.C. 356 (Tax Ct. 1968). · cites it 2× “We further note that the acceptance of respondent's position would lead to a strange result in computing the donee's basis for the property received.”

Crane v. Comm'r, 45 T.C. 397 (Tax Ct. 1966). · cites it 2× “" Further, the respondent's regulations would appear to permit the "tacking" of holding periods in the situation where property is transferred partially by way of gift and partially as a sale.”

Spruance v. Comm'r, 60 T.C. 141 (Tax Ct. 1973). · cites it 2× “76), this being greater than Lea's adjusted basis for the property, and (2) the amount of the gift tax for which Lea is now liable. Sec. 1.1015-4(a), Income Tax Regs.”

Moore v. Comm'r, 20 T.C.M. 1083 (Tax Ct. 1961). · cites it 2× “This element of gift is to be considered in determining the uniform adjusted basis of petitioners for capital gain purposes. See Mertens Law of Federal Income Taxation, § 21.”

Lefkowitz v. Comm'r, 40 T.C.M. 978 (Tax Ct. 1980). · cites it 10× “If the Secretary of his delegate finds it impossible to obtain such facts, the basis in the hands of such donor or last preceding owner shall be the fair market value of such property as found by the Secretary or his delegate as of the date or approximate date at which,…”

Bowers v. Comm'r, 1996 T.C. Memo. 333 (Tax Ct. 1996). · cites it 2× “Bowers' interest was 25 percent of the liabilities, or $ 33,835.79 (25 percent of $ 135,343.”

Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.