Determining Basis for Gifted Personal Property w/o Documentation?
Scenario
>Receive 1099-K from ebay reporting ~200 transactions.
>All but a few of the ebay transactions are of personal property gifted to me more than a year before the transaction; almost all from an estate reduction (not inheritance). No collectibles. The gifted items were acquired by the donor between 4 and 55 years ago. Likely the gifted items were acquired by combination of retail purchase new; flee market & garage sales; auctions; gift; inheritance; and supplied by employer. Almost no documentation is available to substantiate how specifically the individual items were acquired by the donor; when; and what the cost was to the donor.
>Reporting the ebay sales on IRS Schedule D and Form 8949 (with an additional attached statement). The sales were not done intentionally as a business or hobby; just getting rid of unwanted stuff.
Questions
For purposes of generating the Form 8949 attached statement:
>How do I determine the donor’s basis for individual items at the time gifted to me?
>Can I safely consider the ebay proceeds for each gifted (and sold) item to be that item’s FMV at the time the donor gifted it to me?
The donor’s basis and FMV (at time gifted to me) for each item seem to be 2 – pieces of information that are required to determine my basis and holding period for each item.
Answers
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Hello hit_4_show:
You are correct in that ascertaining the donor’s adjusted cost basis in the gifted property is important because you will need that number in order to determine whether you have a capital gain to report.
Given your situation, it appears that the sale of the property involved just personal items, and therefore, if you sold any of these items at a loss, such loss is not deductible. Thus, and given your situation that the sales were not part of a business, knowing the FMV of the personal items is much less important.
However, knowing the FMV of the property at the time the gift was made would have been important had the items sold been something other than personal items, such as property held as an investment, in which case a loss would be deductible as a capital loss.
In terms of trying to determine the donor’s adjusted cost basis, you probably have to make a reasonable educated guess. If you had photographs of the personal items you sold, you could use the photographs as a reference in finding another similar or same product that has a price tag.
With the price of the similar or same product you could then use the Consumer Price Index to calculate the cost of the gifted property on or about the time the donor acquired the item that was later gifted to you. Here is the formula to use if you can or are able to use the CPI:
Past Price = Current Price * (Past CPI / Current CPI)
Based on your post, there might not be much you can do in terms of trying to calculate whether you have a capital gain to report. In the end, you may just have to do the best you can and make an educated guess as to whether you are selling any of the personal items at a gain.
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Thank you. I already filed. I decided to set cost basis, with no basis adjustment, at $0 for almost everything. However, I did adjust gain, as apparently allowed by IRS, with a 8949 code of E, to account for allowed sales fees, S&H, etc.
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