Question

For the scenario described (e. None of these choices are correct), what is the effect of the gift tax paid on the gain basis when the sales price is within the gain basis range?

A) The gift tax paid increases the gain basis.
B) The gift tax paid decreases the gain basis.
C) The gift tax paid has no effect on the gain basis.
D) The gift tax paid reduces the loss basis.

Answer 1

The gift tax paid has no effect on the gain basis when the sales price is within the gain basis range.

Step-by-step explanation:

For the scenario described, when the sales price is within the gain basis range, the gift tax paid has no effect on the gain basis. The gain basis is the original cost of the property, and it remains the same regardless of the gift tax paid. The gift tax is separate from the gain basis and does not impact its calculation.