Title 26, Internal Revenue CodeRelease 119-110
§1015 Basis of Property Acquired by Gifts and Transfers in Trust
Title 26 › Subtitle A — Income Taxes › CHAPTER 1 — NORMAL TAXES AND SURTAXES › Subchapter O — Gain or Loss on Disposition of Property › PART II — BASIS RULES OF GENERAL APPLICATION › § 1015
Summary
When you get property as a gift or from a trust, your tax starting value (basis) usually comes from the person who gave it. If the gift was made after December 31, 1920, you generally use the giver’s basis. But if the giver’s adjusted basis is higher than the property’s fair market value when you got it, you use that fair market value to figure a loss. If the IRS cannot find the facts needed to figure the giver’s basis, the IRS will try to get them from the giver. If the IRS still cannot, it will use the fair market value when the giver got the property. If the property was transferred into a trust after December 31, 1920 (and it was not a gift, bequest, or devise), your basis is the grantor’s basis changed by any gain or loss the grantor had on making the transfer. Property received by gift or trust on or before December 31, 1920, gets a basis equal to its fair market value at that time. If gift tax was paid, the basis can increase under special rules. Gifts made on or after September 2, 1958 get their basis raised by the portion of gift tax that applies to that gift, but not above the property’s fair market value at the gift date. For gifts before September 2, 1958 that still existed on that date, the basis was increased on that date but only up to how much the fair market value exceeded the giver’s basis. The gift tax amount is allocated across all the donor’s gifts that year in proportion to each gift’s size. If the donor and spouse split a gift under section 2513, the tax is split for this purpose. For gifts after December 31, 1976, the basis increase from gift tax is limited so it matches the ratio of the gift’s net appreciation to the gift amount. Transfers between spouses that are covered by section 1041 follow the rules in section 1041, not these rules.
Full Legal Text
Title 26, §1015
Internal Revenue Code, Source: USLM XML via OLRC
(a)Gifts after December 31, 1920
If the property was acquired by gift after December 31, 1920, the basis shall be the same as it would be in the hands of the donor or the last preceding owner by whom it was not acquired by gift, except that if such basis (adjusted for the period before the date of the gift as provided in section 1016) is greater than the fair market value of the property at the time of the gift, then for the purpose of determining loss the basis shall be such fair market value. If the facts necessary to determine the basis in the hands of the donor or the last preceding owner are unknown to the donee, the Secretary shall, if possible, obtain such facts from such donor or last preceding owner, or any other person cognizant thereof. If the Secretary finds it impossible to obtain such facts, the basis in the hands of such donor or last preceding owner shall be the fair market value of such property as found by the Secretary as of the date or approximate date at which, according to the best information that the Secretary is able to obtain, such property was acquired by such donor or last preceding owner.
(b)Transfer in trust after December 31, 1920
If the property was acquired after December 31, 1920, by a transfer in trust (other than by a transfer in trust by a gift, bequest, or devise), the basis shall be the same as it would be in the hands of the grantor increased in the amount of gain or decreased in the amount of loss recognized to the grantor on such transfer under the law applicable to the year in which the transfer was made.
(c)Gift or transfer in trust before January 1, 1921
If the property was acquired by gift or transfer in trust on or before December 31, 1920, the basis shall be the fair market value of such property at the time of such acquisition.
(d)Increased basis for gift tax paid
(1)In general
If—
(A)the property is acquired by gift on or after September 2, 1958, the basis shall be the basis determined under subsection (a), increased (but not above the fair market value of the property at the time of the gift) by the amount of gift tax paid with respect to such gift, or
(B)the property was acquired by gift before September 2, 1958, and has not been sold, exchanged, or otherwise disposed of before such date, the basis of the property shall be increased on such date by the amount of gift tax paid with respect to such gift, but such increase shall not exceed an amount equal to the amount by which the fair market value of the property at the time of the gift exceeded the basis of the property in the hands of the donor at the time of the gift.
(2)Amount of tax paid with respect to gift
For purposes of paragraph (1), the amount of gift tax paid with respect to any gift is an amount which bears the same ratio to the amount of gift tax paid under chapter 12 with respect to all gifts made by the donor for the calendar year (or preceding calendar period) in which such gift is made as the amount of such gift bears to the taxable gifts (as defined in section 2503(a) but computed without the deduction allowed by section 2521) made by the donor during such calendar year or period. For purposes of the preceding sentence, the amount of any gift shall be the amount included with respect to such gift in determining (for the purposes of section 2503(a)) the total amount of gifts made during the calendar year or period, reduced by the amount of any deduction allowed with respect to such gift under section 2522 (relating to charitable deduction) or under section 2523 (relating to marital deduction).
(3)Gifts treated as made one-half by each spouse
For purposes of paragraph (1), where the donor and his spouse elected, under section 2513 to have the gift considered as made one-half by each, the amount of gift tax paid with respect to such gift under chapter 12 shall be the sum of the amounts of tax paid with respect to each half of such gift (computed in the manner provided in paragraph (2)).
(4)Treatment as adjustment to basis
For purposes of section 1016(b), an increase in basis under paragraph (1) shall be treated as an adjustment under section 1016(a).
(5)Application to gifts before 1955
With respect to any property acquired by gift before 1955, references in this subsection to any provision of this title shall be deemed to refer to the corresponding provision of the Internal Revenue Code of 1939 or prior revenue laws which was effective for the year in which such gift was made.
(6)Special rule for gifts made after December 31, 1976
(A)In general
In the case of any gift made after December 31, 1976, the increase in basis provided by this subsection with respect to any gift for the gift tax paid under chapter 12 shall be an amount (not in excess of the amount of tax so paid) which bears the same ratio to the amount of tax so paid as—
(i)the net appreciation in value of the gift, bears to
(ii)the amount of the gift.
(B)Net appreciation
For purposes of paragraph (1), the net appreciation in value of any gift is the amount by which the fair market value of the gift exceeds the donor’s adjusted basis immediately before the gift.
(e)Gifts between spouses
In the case of any property acquired by gift in a transfer described in section 1041(a), the basis of such property in the hands of the transferee shall be determined under section 1041(b)(2) and not this section.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
section 2521, referred to in subsec. (d)(2), was repealed by Pub. L. 94–455, title XX, § 2001(b)(3), Oct. 4, 1976, 90 Stat. 1849. The Internal Revenue Code of 1939, referred to in subsec. (d)(5), is act Feb. 10, 1939, ch. 2, 53 Stat. 1. Prior to the enactment of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], the 1939 Code was classified to former Title 26, Internal Revenue Code. For table of comparisons of the 1939 Code to the 1986 Code, see Table I preceding section 1 of this title.
Editorial Notes
Amendments
1984—Subsec. (e). Pub. L. 98–369 added subsec. (e). 1981—Subsec. (d)(2). Pub. L. 97–34 substituted “calendar year (or preceding calendar period)” for “calendar quarter (or calendar year if the gift was made before
January 1, 1971)” and “calendar year or period” for “calendar quarter or year” in two places. 1976—Subsec. (a). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary” in four places. Subsec. (d)(1)(A), (B). Pub. L. 94–455, § 1901(a)(122), substituted “
September 2, 1958” for “the date of enactment of the Technical
Amendments
Act of 1958”. Subsec. (d)(6). Pub. L. 94–455, § 2005(c), added par. (6). 1970—Subsec. (d)(2). Pub. L. 91–614 substituted “calendar quarter (or calendar year if the gift was made before January 1, 1971)” for “calendar year” the first place it appears and “calendar quarter or year” for “calendar year” every other place it appears. 1958—Subsec. (d). Pub. L. 85–866 added subsec. (d).
Statutory Notes and Related Subsidiaries
Effective Date
of 1984 AmendmentAmendment by Pub. L. 98–369 applicable to transfers after July 18, 1984, in taxable years ending after such date, subject to election to have amendment apply to transfers after 1983 or to transfers pursuant to existing decrees, see section 421(d) of Pub. L. 98–369, set out as an
Effective Date
note under section 1041 of this title.
Effective Date
of 1981 AmendmentAmendment by Pub. L. 97–34 applicable with respect to gifts made after Dec. 31, 1981, see section 442(e) of Pub. L. 97–34, set out as a note under section 2501 of this title.
Effective Date
of 1976 AmendmentAmendment by section 1901(a)(122) of Pub. L. 94–455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title. Pub. L. 94–455, title XX, § 2005(f), Oct. 4, 1976, 90 Stat. 1878, as amended by Pub. L. 95–600, title V, § 515(6), Nov. 6, 1978, 92 Stat. 2884, provided that: “(1) Except as provided in paragraph (2), the
Amendments
made by this section [enacting section 1023, 1040, 6039A, and 6694 of this title, amending section 691, 1016, and 1246 of this title, and renumbering former section 1023 as 1024] shall apply in respect of decedents dying after
December 31, 1979. “(2) The amendment made by subsection (c) [amending this section] shall apply to gifts made after
December 31, 1976.”
Effective Date
of 1970 AmendmentAmendment by Pub. L. 91–614 applicable with respect to gifts made after Dec. 31, 1970, see section 102(e) of Pub. L. 91–614, set out as a note under section 2501 of this title.
Effective Date
of 1958 AmendmentAmendment by Pub. L. 85–866 applicable to taxable years beginning after Dec. 31, 1953, and ending after Aug. 16, 1954, see section 1(c)(1) of Pub. L. 85–866, set out as a note under section 165 of this title.
Reference
Citations & Metadata
Citation
26 U.S.C. § 1015
Title 26, Internal Revenue Code
Last Updated
Sep 22, 2026
Release point: 119-110