Internal Revenue Code:Sec. 1015. Basis of property acquired by gifts and transfers in trust

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Location in Internal Revenue Code

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle A - Income Taxes
       CHAPTER 1 - NORMAL TAXES AND SURTAXES
        Subchapter O - Gain or Loss on Disposition of Property
         PART II - BASIS RULES OF GENERAL APPLICATION
       

Statute

    Sec. 1015. Basis of property acquired by gifts and transfers in
        trust
 
    (a) Gifts after December 31, 1920
      If the property was acquired by gift after December 31, 1920, the
    basis shall be 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,
    except that if such basis (adjusted for the period before the date
    of the gift as provided in section 1016) is greater than the fair
    market value of the property at the time of the gift, then for the
    purpose of determining loss the basis shall be such fair market
    value.  If the facts necessary to determine the basis in the hands
    of the donor or the last preceding owner are unknown to the donee,
    the Secretary shall, if possible, obtain such facts from such donor
    or last preceding owner, or any other person cognizant thereof.  If
    the Secretary 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 Secretary as of
    the date or approximate date at which, according to the best
    information that the Secretary is able to obtain, such property was
    acquired by such donor or last preceding owner.
    (b) Transfer in trust after December 31, 1920
      If the property was acquired after December 31, 1920, by a
    transfer in trust (other than by a transfer in trust by a gift,
    bequest, or devise), the basis shall be the same as it would be in
    the hands of the grantor increased in the amount of gain or
    decreased in the amount of loss recognized to the grantor on such
    transfer under the law applicable to the year in which the transfer
    was made.
    (c) Gift or transfer in trust before January 1, 1921
      If the property was acquired by gift or transfer in trust on or
    before December 31, 1920, the basis shall be the fair market value
    of such property at the time of such acquisition.
    (d) Increased basis for gift tax paid
      (1) In general
        If -
          (A) the property is acquired by gift on or after September 2,
        1958, the basis shall be the basis determined under subsection
        (a), increased (but not above the fair market value of the
        property at the time of the gift) by the amount of gift tax
        paid with respect to such gift, or
          (B) the property was acquired by gift before September 2,
        1958, and has not been sold, exchanged, or otherwise disposed
        of before such date, the basis of the property shall be
        increased on such date by the amount of gift tax paid with
        respect to such gift, but such increase shall not exceed an
        amount equal to the amount by which the fair market value of
        the property at the time of the gift exceeded the basis of the
        property in the hands of the donor at the time of the gift.
      (2) Amount of tax paid with respect to gift
        For purposes of paragraph (1), the amount of gift tax paid with
      respect to any gift is an amount which bears the same ratio to
      the amount of gift tax paid under chapter 12 with respect to all
      gifts made by the donor for the calendar year (or preceding
      calendar period) in which such gift is made as the amount of such
      gift bears to the taxable gifts (as defined in section 2503(a)
      but computed without the deduction allowed by section 2521) made
      by the donor during such calendar year or period.  For purposes
      of the preceding sentence, the amount of any gift shall be the
      amount included with respect to such gift in determining (for the
      purposes of section 2503(a)) the total amount of gifts made
      during the calendar year or period, reduced by the amount of any
      deduction allowed with respect to such gift under section 2522
      (relating to charitable deduction) or under section 2523
      (relating to marital deduction).
      (3) Gifts treated as made one-half by each spouse
        For purposes of paragraph (1), where the donor and his spouse
      elected, under section 2513 to have the gift considered as made
      one-half by each, the amount of gift tax paid with respect to
      such gift under chapter 12 shall be the sum of the amounts of tax
      paid with respect to each half of such gift (computed in the
      manner provided in paragraph (2)).
      (4) Treatment as adjustment to basis
        For purposes of section 1016(b), an increase in basis under
      paragraph (1) shall be treated as an adjustment under section
      1016(a).
      (5) Application to gifts before 1955
        With respect to any property acquired by gift before 1955,
      references in this subsection to any provision of this title
      shall be deemed to refer to the corresponding provision of the
      Internal Revenue Code of 1939 or prior revenue laws which was
      effective for the year in which such gift was made.
      (6) Special rule for gifts made after December 31, 1976
        (A) In general
          In the case of any gift made after December 31, 1976, the
        increase in basis provided by this subsection with respect to
        any gift for the gift tax paid under chapter 12 shall be an
        amount (not in excess of the amount of tax so paid) which bears
        the same ratio to the amount of tax so paid as -
            (i) the net appreciation in value of the gift, bears to
            (ii) the amount of the gift.
        (B) Net appreciation
          For purposes of paragraph (1), the net appreciation in value
        of any gift is the amount by which the fair market value of the
        gift exceeds the donor's adjusted basis immediately before the
        gift.
    (e) Gifts between spouses
      In the case of any property acquired by gift in a transfer
    described in section 1041(a), the basis of such property in the
    hands of the transferee shall be determined under section
    1041(b)(2) and not this section.
 

Sources

    (Aug. 16, 1954, ch. 736, 68A Stat. 298; Pub. L. 85-866, title I,
    Sec. 43(a), Sept. 2, 1958, 72 Stat. 1640; Pub. L. 91-614, title I,
    Sec. 102(d)(1), Dec. 31, 1970, 84 Stat. 1841; Pub. L. 94-455, title
    XIX, Sec. 1901(a)(122), 1906(b) (13)(A), title XX, Sec. 2005(c),
    Oct. 4, 1976, 90 Stat. 1784, 1834, 1877; Pub. L. 97-34, title IV,
    Sec. 442(d)(1), Aug. 13, 1981, 95 Stat. 322; Pub. L. 98-369, div.
    A, title IV, Sec. 421(b)(5), July 18, 1984, 98 Stat. 794.)
 

References in Text

                             REFERENCES IN TEXT
      Section 2521, referred to in subsec. (d)(2), was repealed by Pub.
    L. 94-455, title XX, Sec. 2001(b)(3), Oct. 4, 1976, 90 Stat. 1849.
      The Internal Revenue Code of 1939, referred to in subsec. (d)(5),
    is act Feb. 10, 1939, ch. 2, 53 Stat. 1, as amended.  Prior to the
    enactment of the Internal Revenue Code of 1986 (formerly I.R.C.
    1954), the 1939 Code was classified to former Title 26, Internal
    Revenue Code. For table of comparisons of the 1939 Code to the 1986
    Code, see Table I preceding section 1 of this title.
 

Miscellaneous

                                 AMENDMENTS
      1984 - Subsec. (e). Pub. L. 98-369 added subsec. (e).
      1981 - Subsec. (d)(2). Pub. L. 97-34 substituted ''calendar year
    (or preceding calendar period)'' for ''calendar quarter (or
    calendar year if the gift was made before January 1, 1971)'' and
    ''calendar year or period'' for ''calendar quarter or year'' in two
    places.
      1976 - Subsec. (a). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck
    out ''or his delegate'' after ''Secretary'' in four places.
      Subsec. (d)(1)(A), (B). Pub. L. 94-455, Sec. 1901(a)(122),
    substituted ''September 2, 1958'' for ''the date of enactment of
    the Technical Amendments Act of 1958''.
      Subsec. (d)(6). Pub. L. 94-455, Sec. 2005(c), added par. (6).
      1970 - Subsec. (d)(2). Pub. L. 91-614 substituted ''calendar
    quarter (or calendar year if the gift was made before January 1,
    1971)'' for ''calendar year'' the first place it appears and
    ''calendar quarter or year'' for ''calendar year'' every other
    place it appears.
      1958 - Subsec. (d). Pub. L. 85-866 added subsec. (d).
                      EFFECTIVE DATE OF 1984 AMENDMENT
      Amendment by Pub. L. 98-369 applicable to transfers after July
    18, 1984, in taxable years ending after such date, subject to
    election to have amendment apply to transfers after 1983 or to
    transfers pursuant to existing decrees, see section 421(d) of Pub.
    L. 98-369, set out as an Effective Date note under section 1041 of
    this title.
                      EFFECTIVE DATE OF 1981 AMENDMENT
      Amendment by Pub. L. 97-34 applicable with respect to gifts made
    after Dec. 31, 1981, see section 442(e) of Pub. L. 97-34, set out
    as a note under section 2501 of this title.
                      EFFECTIVE DATE OF 1976 AMENDMENT
      Amendment by section 1901(a)(122) of Pub. L. 94-455 applicable
    with respect to taxable years beginning after Dec. 31, 1976, see
    section 1901(d) of Pub. L. 94-455, set out as a note under section
    2 of this title.
      Section 2005(f) of Pub. L. 94-455, as amended by Pub. L. 95-600,
    title V, Sec. 515(6), Nov. 6, 1978, 92 Stat. 2884, provided that:
      ''(1) Except as provided in paragraph (2), the amendments made by
    this section (enacting sections 1023, 1040, 6039A, and 6694 of this
    title, amending sections 691, 1016, and 1246 of this title, and
    renumbering former section 1023 as 1024) shall apply in respect of
    decedents dying after December 31, 1979.
      ''(2) The amendment made by subsection (c) (amending this
    section) shall apply to gifts made after December 31, 1976.''
                      EFFECTIVE DATE OF 1970 AMENDMENT
      Amendment by Pub. L. 91-614 applicable with respect to gifts made
    after Dec. 31, 1970, see section 102(e) of Pub. L. 91-614, set out
    as a note under section 2501 of this title.
                      EFFECTIVE DATE OF 1958 AMENDMENT
      Amendment by Pub. L. 85-866 applicable to taxable years beginning
    after Dec. 31, 1953, and ending after Aug. 16, 1954, see section
    1(c)(1) of Pub. L. 85-866, set out as a note under section 165 of
    this title.
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in sections 382, 1001, 1312, 2056A,
    2511, 2654 of this title.