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Accounting Problem: Don's aunt Natalie gave him a house

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Please help with the following problem. Provide step by step calculations.

During the current year, Don's aunt Natalie gave him a house. At the time of the gift, the house had a FMV of $42,000 and his aunt's adjusted basis was $32,000. After deducting the annual exclusion, the amount of the gift was $30,000. His aunt paid a gift tax of $9,000 on the house. What is Don's basis in the house for purposes of determining gain?

Tom purchased a machine for use in his trade or business several years ago for $25,000. During the current year, Tom donates the machine to the local community college. At the time of the contribution, the machine's adjusted basis is $10,000 and its FMV is $15,000. Tom's AGI for the year is $28,000. What is the amount of his charitable contribution deduction?

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Solution Summary

The amount of charitable contribution deductions is determined. The basis in the house for purposes of determining gain is given.

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ANSWERS

Don
Original basis + increase in basis for done = 32,000 + ...

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