3. A receives a gift from B. B’s basis in the propertywas $200,000 and the fair market value of the property was $500,000on the date of the gift. B held the property for 5 years andincurred $25,000 of gift tax due to the gift. A week after Areceives the property, A sells the property. What are the taxresults to A if A sells the property for $510,000? $450,000?
4. Same facts as above except B had a basis of $750,000 in theproperty. What are the results to A now?
5. Assume that B knew the tax rules applicable togifts in question 4. Why wouldn’t B sell the property, take a$200,000 loss and make a gift of cash to B of $500,000?
