Question

John's brother Bob bought a 3 acre house lot in 1985 for $15,000. Five years later, when the property was valued at $12,000, he gave the house lot to John. The property has slowly continued to lose value, and John just sold it for $10,000. What is John's tax basis for the property?

Answer 1

the tax basis of an asset is generally its cost basis.Tax basis may be reduced by allowances for depreciation. Such reduced basis is referred to as the adjusted tax basis. Adjusted tax basis is used in determining gain or loss from disposition of the asset.

The adjusted tax basis of a property can be determined as Fair market value as on date of purchase,( here jhon got the house when its value is $12,000 and reduced by any other expenses related to such transfer) and also reduced by the value of depreciation

so here the adjusted tax basis for the property ( since no discussion regarding depreciation) is $12000 itself