Gifts after
If the property was acquired by gift after , the basis shall be the same as it would be in the hands of the donor or the last preceding owner by whom it was not acquired by gift, except that if such basis (adjusted for the period before the date of the gift as provided in section 1016) is greater than the fair market value of the property at the time of the gift, then for the purpose of determining loss the basis shall be such fair market value. If the facts necessary to determine the basis in the hands of the donor or the last preceding owner are unknown to the donee, the Secretary shall, if possible, obtain such facts from such donor or last preceding owner, or any other person cognizant thereof. If the Secretary 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 as of the date or approximate date at which, according to the best information that the Secretary is able to obtain, such property was acquired by such donor or last preceding owner.
Transfer in trust after
If the property was acquired after , by a transfer in trust (other than by a transfer in trust by a gift, bequest, or devise), the basis shall be the same as it would be in the hands of the grantor increased in the amount of gain or decreased in the amount of loss recognized to the grantor on such transfer under the law applicable to the year in which the transfer was made.
Gift or transfer in trust before
If the property was acquired by gift or transfer in trust on or before , the basis shall be the fair market value of such property at the time of such acquisition.
Increased basis for gift tax paid
In general
Amount of tax paid with respect to gift
For purposes of paragraph (1), the amount of gift tax paid with respect to any gift is an amount which bears the same ratio to the amount of gift tax paid under chapter 12 with respect to all gifts made by the donor for the calendar year (or preceding calendar period) in which such gift is made as the amount of such gift bears to the taxable gifts (as defined in section 2503(a) but computed without the deduction allowed by section 2521) made by the donor during such calendar year or period. For purposes of the preceding sentence, the amount of any gift shall be the amount included with respect to such gift in determining (for the purposes of section 2503(a)) the total amount of gifts made during the calendar year or period, reduced by the amount of any deduction allowed with respect to such gift under section 2522 (relating to charitable deduction) or under section 2523 (relating to marital deduction).
Gifts treated as made one-half by each spouse
For purposes of paragraph (1), where the donor and his spouse elected, under section 2513 to have the gift considered as made one-half by each, the amount of gift tax paid with respect to such gift under chapter 12 shall be the sum of the amounts of tax paid with respect to each half of such gift (computed in the manner provided in paragraph (2)).
Treatment as adjustment to basis
For purposes of section 1016(b), an increase in basis under paragraph (1) shall be treated as an adjustment under section 1016(a).
Application to gifts before 1955
With respect to any property acquired by gift before 1955, references in this subsection to any provision of this title shall be deemed to refer to the corresponding provision of the Internal Revenue Code of 1939 or prior revenue laws which was effective for the year in which such gift was made.
Special rule for gifts made after
In general
Net appreciation
For purposes of paragraph (1), the net appreciation in value of any gift is the amount by which the fair market value of the gift exceeds the donor’s adjusted basis immediately before the gift.
Gifts between spouses
In the case of any property acquired by gift in a transfer described in section 1041(a), the basis of such property in the hands of the transferee shall be determined under section 1041(b)(2) and not this section.
Aug. 16, 1954, ch. 73668A Stat. 298Pub. L. 85–866, title I, § 43(a)72 Stat. 1640Pub. L. 91–614, title I, § 102(d)(1)84 Stat. 1841Pub. L. 94–455, title XIX90 Stat. 1784Pub. L. 97–34, title IV, § 442(d)(1)95 Stat. 322Pub. L. 98–369, div. A, title IV, § 421(b)(5)98 Stat. 794(, ; , , ; , , ; , §§ 1901(a)(122), 1906(b) (13)(A), title XX, § 2005(c), , , 1834, 1877; , , ; , , .)
Editorial Notes
References in Text
Pub. L. 94–455, title XX, § 2001(b)(3)90 Stat. 1849Section 2521, referred to in subsec. (d)(2), was repealed by , , .
act Feb. 10, 1939, ch. 253 Stat. 1section 1 of this titleThe Internal Revenue Code of 1939, referred to in subsec. (d)(5), is , . Prior to the enactment of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], the 1939 Code was classified to former Title 26, Internal Revenue Code. For table of comparisons of the 1939 Code to the 1986 Code, see Table I preceding .
Editorial Notes
Amendments
Pub. L. 98–3691984—Subsec. (e). added subsec. (e).
Pub. L. 97–341981—Subsec. (d)(2). substituted “calendar year (or preceding calendar period)” for “calendar quarter (or calendar year if the gift was made before )” and “calendar year or period” for “calendar quarter or year” in two places.
Pub. L. 94–455, § 1906(b)(13)(A)1976—Subsec. (a). , struck out “or his delegate” after “Secretary” in four places.
Pub. L. 94–455, § 1901(a)(122)Subsec. (d)(1)(A), (B). , substituted “” for “the date of enactment of the Technical Amendments Act of 1958”.
Pub. L. 94–455, § 2005(c)Subsec. (d)(6). , added par. (6).
Pub. L. 91–6141970—Subsec. (d)(2). substituted “calendar quarter (or calendar year if the gift was made before )” for “calendar year” the first place it appears and “calendar quarter or year” for “calendar year” every other place it appears.
Pub. L. 85–8661958—Subsec. (d). added subsec. (d).
Statutory Notes and Related Subsidiaries
Effective Date of 1984 Amendment
Pub. L. 98–369section 421(d) of Pub. L. 98–369section 1041 of this titleAmendment by applicable to transfers after , in taxable years ending after such date, subject to election to have amendment apply to transfers after 1983 or to transfers pursuant to existing decrees, see , set out as an Effective Date note under .
Effective Date of 1981 Amendment
Pub. L. 97–34section 442(e) of Pub. L. 97–34section 2501 of this titleAmendment by applicable with respect to gifts made after , see , set out as a note under .
Effective Date of 1976 Amendment
section 1901(a)(122) of Pub. L. 94–455section 1901(d) of Pub. L. 94–455section 2 of this titleAmendment by applicable with respect to taxable years beginning after , see , set out as a note under .
Pub. L. 94–455, title XX, § 2005(f)90 Stat. 1878Pub. L. 95–600, title V, § 515(6)92 Stat. 2884
Effective Date of 1970 Amendment
Pub. L. 91–614section 102(e) of Pub. L. 91–614section 2501 of this titleAmendment by applicable with respect to gifts made after , see , set out as a note under .
Effective Date of 1958 Amendment
Pub. L. 85–866section 1(c)(1) of Pub. L. 85–866section 165 of this titleAmendment by applicable to taxable years beginning after , and ending after , see , set out as a note under .