Not tax advice · last updated 25 October 2026

Gift and inheritance basis

review with a tax pro. The worksheet does not apply carryover basis or a step-up on its own.

For a lifetime gift, IRC 1015 generally gives you the donor's basis. If fair market value at the gift is below that basis, a later loss uses the fair market value, a later gain uses the donor's basis, and a sale between them is no gain and no loss. If fair market value is equal to or above the donor's basis, use the donor's basis.

For inherited property, IRC 1014 generally uses fair market value at death. That can step the basis up or down. This page does not compute an annual exclusion, an estate-tax figure, or a state rule. Examples: donor basis $10,000, value $4,000, sale $3,000 is a $1,000 loss; sale $12,000 is a $2,000 gain; sale $7,000 is neither. Donor basis $4,000, value $10,000, sale $7,000 is a $3,000 gain. Inherited value $8,000, sale $10,000 is a $2,000 gain; sale $5,000 is a $3,000 loss.

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