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Well, let's say for argument's sake that the donor thinks it's a dog, but the recipient thinks it's the next [insert your favorite overblown tech wonderstock here]. The donor wants to get rid of it, doesn't really need the loss because he's got enough capital loss carryover to take him past death, and likes the recipient, who doesn't plan on having a loss, but a sizeable gain someday.

<< Even if the recipient plans to have a sizable gain, he/she will be paying taxes on the gain from the new lower FMV basis rather from the donor's higher original basis. The tax on the gain will be greater.
Still no advantage (other than getting a gift).
When the donor's basis is lower than the FMV the recipient's basis stays at the donor's basis. It is not a balanced law; both are advantage IRS.>>
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