Taxation of Securities Received as a Gift

What this video covers

• Why appreciated gifts use carryover basis from the donor and tack on the donor's holding period, and why the fair market value (FMV) at the gift date is a deliberate distractor
• How the dual basis rule activates only when the FMV at the time of the gift is lower than the donor's original cost basis
• What happens when a depreciated gift is sold at a loss, FMV-at-gift becomes the cost basis and the holding period restarts the day after the gift date
• The "no man's land" rule, when the sale price falls between the donor's basis and the FMV at gift, the result is always no gain or loss recognized
• Why the answer is never "use the lower basis" for depreciated gifts, and how to identify the correct basis based on the sale price relative to the two reference points
• How gift tax paid by the donor can increase the donee's cost basis, but only for the portion attributable to net appreciation in an appreciated gift
• Why depreciated gifts receive zero gift tax adjustment to basis, regardless of how much gift tax the donor paid