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Donee's Basis in Gifted Property

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Is this true or false with respect to the basis of property? Why or why not?
In 2002, John acquires property with a FMV of $500,000. In 2004, John gifts the property to Jane when its FMV is $400,000. Jane's basis in the property is $500,000.

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Solution Summary

This solution cites authorities and discusses how the donee determines his or her basis in gifted property.

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Assuming that John's basis in the property is greater than $400,000, this is false. IRC 1015(a) states that "If the property was acquired by gift after December 31, 1920, the basis ...

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