Publication Date - July 2006

NOTE: This guide is current through the publication date. Since changes may have occurred after the publication date that would affect the accuracy of this document, no guarantees are made concerning the technical accuracy after the publication date.

Chapter 2/ Table of Contents / Chapter 4
Tax Code, Regulations and Official Guidance Search

Chapter Three - Basis on Farm Assets

• Introduction
• Like Kind Exchanges
• Gifted Property
• Inherited Property
• Farm Sale
• Cost Recovery - Depreciation and Depletion

Gifted Property

To determine the basis of such property consider the following:

1. The original owner’s basis in the property before the transfer
2. The FMV of the property when given, and;
3. The amount of tax paid.

The new owner’s basis in the property received is usually the smaller of the FMV or the donor’s adjusted basis. If tax is paid on the transfer, then a part of that amount is added to the donor’s basis in arriving at the new owner’s basis (See IRC § 1015(a), Treas. Reg. § 1.1015-1 for additional information.).