[Code of Federal Regulations]
[Title 26, Volume 11]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.1015-1]

[Page 56-57]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.1015-1  Basis of property acquired by gift after December 31, 1920.

    (a) General rule. (1) In the case of property acquired by gift after 
December 31, 1920 (whether by a transfer in trust or otherwise), the 
basis of the property for the purpose of determining gain is the same as 
it would be in the hands of the donor or the last preceding owner by 
whom it was not acquired by gift. The same rule applies in determining 
loss unless the basis (adjusted for the period prior to the date of gift 
in accordance with sections 1016 and 1017) is greater than the fair 
market value of the property at the time of the gift. In such case, the 
basis for determining loss is the fair market value at the time of the 
gift.
    (2) The provisions of subparagraph (1) of this paragraph may be 
illustrated by the following example.

    Example: A acquires by gift income-producing property which has an 
adjusted basis of $100,000 at the date of gift. The fair market value of 
the property at the date of gift is $90,000. A later sells the property 
for $95,000. In such case there is neither gain nor loss. The basis for 
determining loss is $90,000; therefore, there is no loss. Furthermore, 
there is no gain, since the basis for determining gain is $100,000.

    (3) If the facts necessary to determine the basis of property in the 
hands of the donor or the last preceding owner by whom it was not 
acquired by gift are unknown to the donee, the district director shall, 
if possible, obtain such facts from such donor or last preceding owner, 
or any other person cognizant thereof. If the district director finds it 
impossible to obtain such facts, the basis in the hands of such donor or 
last preceding owner shall be the fair market value of such property as 
found by the district director as of the date or approximate date at 
which, according to the best information the district director is able 
to obtain, such property was acquired by such donor or last preceding 
owner. See paragraph (e) of this section for rules relating to fair 
market value.
    (b) Uniform basis; proportionate parts of. Property acquired by gift 
has a single or uniform basis although more than one person may acquire 
an interest in such property. The uniform basis of the property remains 
fixed subject to proper adjustment for items under sections 1016 and 
1017. However, the value of the proportionate parts of the uniform basis 
represented, for instance, by the respective interests of the life 
tenant and remainderman are adjustable to reflect the change in the 
relative values of such interest on account of the lapse of time. The 
portion of the basis attributable to an interest at the time of its sale 
or other disposition shall be determined under the rules provided in 
Sec. 1.1014-5. In determining gain or loss from the sale or other 
disposition after October 9, 1969, of a term interest in property (as 
defined in Sec. 1.1001-1(f)(2)) the adjusted basis of which is 
determined pursuant, or by reference, to section 1015, that part of the 
adjusted uniform basis assignable under the rules of Sec. 1.1014- 5(a) 
to the interest sold or otherwise disposed of shall be disregarded to 
the extent and in the manner provided by section 1001(e) and Sec. 
1.1001-1(f).
    (c) Time of acquisition. The date that the donee acquires an 
interest in property by gift is when the donor relinquishes dominion 
over the property and not necessarily when title to the property is 
acquired by the donee. Thus, the date that the donee acquires an 
interest in property by gift where he is a successor in interest, such 
as in the case of a remainderman of a life estate or a beneficiary of 
the distribution of the corpus of a trust, is the date such interests 
are created by the donor

[[Page 57]]

and not the date the property is actually acquired.
    (d) Property acquired by gift from a decedent dying after December 
31, 1953. If an interest in property was acquired by the taxpayer by 
gift from a donor dying after December 31, 1953, under conditions which 
required the inclusion of the property in the donor's gross estate for 
estate tax purposes, and the property had not been sold, exchanged, or 
otherwise disposed of by the taxpayer before the donor's death, see the 
rules prescribed in section 1014 and the regulations thereunder.
    (e) Fair market value. For the purposes of this section, the value 
of property as appraised for the purpose of the Federal gift tax, or, if 
the gift is not subject to such tax, its value as appraised for the 
purpose of a State gift tax, shall be deemed to be the fair market value 
of the property at the time of the gift.
    (f) Reinvestments by fiduciary. If the property is an investment by 
the fiduciary under the terms of the gift (as, for example, in the case 
of a sale by the fiduciary of property transferred under the terms of 
the gift, and the reinvestment of the proceeds), the cost or other basis 
to the fiduciary is taken in lieu of the basis specified in paragraph 
(a) of this section.
    (g) Records. To insure a fair and adequate determination of the 
proper basis under section 1015, persons making or receiving gifts of 
property should preserve and keep accessible a record of the facts 
necessary to determine the cost of the property and, if pertinent, its 
fair market value as of March 1, 1913, or its fair market value as of 
the date of the gift.

[T.D. 6500, 25 FR 11910, Nov. 26, 1960, as amended by T.D. 6693, 28 FR 
12818, Dec. 3, 1963; T.D. 7142, 36 FR 18952, Sept. 24, 1971]