Question

Kim, a single woman, owned a building with a fair market value of $2,000,000. Kim's adjusted basis in the building was $1,000,000. This year, Kim agreed to sell the building to her adult son, Robby for $1,300,000. She made no other gifts to Robby this year. What is the amount of Kim’s taxable gift?

Group of answer choices $285,000 $685,000 $985,000 $2,000,000

Answer 1

fair market value of building $2,000,000

Selling price $1,300,000

adjusted basis in the building was $1,000,000

Amount Deductable for tax calculation is $15000

The seller might have to file a gift return. They're allowed to give $15,000 per person each year without having to file a gift return

you can sell your property at a loss to a family member, but you can't take a deduction on the loss

so Kim’s taxable gift =  fair market value of building or Selling price (Take highest amount)- Cost Price

=2,000,000-1,000,000

=1,000,000

After deduction=1,000,000-15000

=$985,000

The amount of Kim’s taxable gift =$985,000