Problem:
During the current year, Don's aunt Natalie gave him a house. At the time of the gift, the house had a FMV of $144,000 and his aunt's adjusted basis was $133,000. After deducting the annual exclusion, the amount of the gift was $130,000. His aunt paid a gift tax of $20,000 on the house.
Required:
What is Don's basis in the house for purposes of determining gain?
- $130,000
- $133,000
- $134,692
- $144,000
Note: Please show the work not just the answer.