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I'm sure that this has come up before, but I haven't located it by quickly scanning. My in-laws gave us a gift of mutual fund shares last December. When we sell, are we liable for the whole amount of the gift, or just the profit or loss between what my in-laws paid and what we sell it for? (let's say they paid $5,000 for it in 1997, we sell for $10,000, we are liable for a profit of $5,000, *not* the whole enchilada of $10,000).
You are correct in your assumption.

Your cost basis=the cost basis of the donor at the time they gifted to you...

be sure to add to this basis any reinvested dividends/distributions since the time you received the shares.

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