Incoming gift implications
I have a family member filing a gift tax return to transfer farm equipment that is already 100% depreciated. This is leaving their Schedule F, and I would like to know how that fair value is represented for my 1040 and how it should be entered into my schedule F
Answers
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To figure out the basis of property received as a gift, you must know three amounts:
- The family member's adjusted basis just before they made the gift.
- The fair market value (FMV) of the property at the time they made the gift.
- The amount of any gift tax paid on the gift
If the FMV of the property at the time the family member made the gift is equal to or greater than their adjusted basis, your adjusted basis is the family member's adjusted basis just before they made the gift plus the amount of gift tax they paid. For example, if their adjusted basis was $50,000 and they paid $1,000 in gift tax, your basis for the equipment to include on your own Schedule F would be $51,000.
