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TaxService Date: 1/27/99 3:19 PM Number: 9072
When it comes to gifting stock, generally:), your basis is passed on to the person to whom you make the gift. If the stock was worth $15,000 and your basis was only $10,000, the amount of that gift would be $10,000.

Are you sure about this? I thought it was a $15,000 gift, and the recipient had a $10,000 basis in the stock. This could be important to me; I've been studying the possible uses of some stock I have with essentially zero basis.

***You are correct!:)

For purposes of the gift tax return, The fair market value of a
stock or bond (whether listed or unlisted) is the mean between
the highest and lowest selling prices quoted on the valuation date.
If only the closing selling prices are available, then the fair market
value is the mean between the quoted closing selling price on the
valuation date and on the trading day before the valuation date.
There are other instructions if there were no sales on the valuation
date, but that has naught to do with your particular question.

Stock of close corporations or inactive stock must be valued on
the basis of net worth, earnings, earning and dividend capacity,
and other relevant factors. Generally, the best indication of the
value of real property is the price paid for the property in an
arm's-length transaction on or before the valuation date. If there
has been no such transaction, use the comparable sales method.
In comparing similar properties, consider differences in the date
of the sale, and the size, condition, and location of the properties,
and make all appropriate adjustments. The value of all annuities,
life estates, terms for years, remainders, or reversions is generally
the present value on the date of the gift.

Thank You!!=:)

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