What Is the 1015 Tax Form for Gifted Property?

When you receive a significant gift like real estate or stock, you must establish its cost basis for tax purposes. While the IRS does not have a “Form 1015,” the rules are governed by Section 1015 of the Internal Revenue Code. Your basis, which is what the property is considered to have cost you, directly impacts the taxable gain or loss you report when you sell the asset. The person who gave you the gift provides the information needed for this calculation.

Information Provided by the Donor

The donor is responsible for providing you with two pieces of information to determine your tax basis. This information is a private record passed from the donor to you and is not filed with the IRS. The first data point is the donor’s “adjusted basis,” which is what they originally paid for the asset, plus capital improvements, minus any depreciation claimed.

The second piece of information is the fair market value (FMV) of the property at the time the gift was made. The FMV is the price the property would sell for on the open market. For publicly traded stock, the FMV is the average of the high and low selling prices on the gift date, while for real estate, it might be determined by a professional appraisal.

Determining Your Basis as the Recipient

After receiving the donor’s adjusted basis and the fair market value, you can determine your basis. Gifted property uses a dual-basis system, meaning your basis can be different depending on whether you later sell the property for a gain or a loss. This requires careful attention to the relationship between the donor’s basis and the FMV at the time of the gift.

For calculating a future gain, the rule is straightforward: your basis is the same as the donor’s adjusted basis. This is often called a “carryover basis” because the donor’s basis simply carries over to you. For instance, if your parent gives you stock for which they paid $5,000, your basis for calculating a gain is also $5,000, regardless of what the stock was worth on the day you received it.

The rule for calculating a loss is different. For loss purposes, your basis is the lesser of either the donor’s adjusted basis or the property’s FMV at the time of the gift. Consider a scenario where property was bought for $100,000, but on the day of the gift, it is only worth $80,000. Your basis for calculating a loss would be $80,000, a rule which prevents taxpayers from transferring unrealized “paper” losses to others.

A further adjustment may be necessary if the donor paid federal gift tax on the transfer. Your basis can be increased by the portion of the gift tax paid that is attributable to the net appreciation in the value of the gift. This allows a partial recovery of the gift tax paid by adding it to your basis.

Calculating Gain or Loss on Sale

When you sell the gifted property, you subtract your basis from the sale price to determine the outcome. Due to the dual-basis rules, there are three possibilities.

If you sell the property for more than your gain basis (the donor’s adjusted basis), the difference is your capital gain. For example, if the donor’s basis was $10,000 and you sell the asset for $15,000, you have a $5,000 capital gain.

If you sell the property for less than your loss basis (the lesser of the donor’s basis or the gift-date FMV), the difference is your capital loss. For instance, if the gain basis was $20,000 and the loss basis was $15,000, selling the property for $12,000 results in a $3,000 capital loss.

If the sale price falls between the gain basis and the loss basis, you recognize neither a gain nor a loss. Using the previous example, selling the property for any price between $15,000 and $20,000 means you report nothing from the sale on your tax return.

Record-Keeping and Related Tax Forms

Proper record-keeping is an important part of receiving gifted property. You should securely store the statement from the donor that details their adjusted basis and the FMV at the time of the gift, as you will need this information when you sell the property. This documentation serves as the proof for the basis you claim on your tax return.

When you sell the asset, the transaction is reported on Schedule D, Capital Gains and Losses, which is filed with your Form 1040. You will use Form 8949, Sales and Other Dispositions of Capital Assets, to detail the sale. This includes listing the date acquired (which is the donor’s original acquisition date), the date sold, the sale price, and your calculated cost basis.

The person who gave you the gift may have a separate filing obligation. If the value of the gift exceeds the annual gift tax exclusion amount ($19,000 for 2025), the donor is required to file Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. This is the donor’s responsibility and does not directly involve you as the recipient, though any gift tax they pay could potentially increase your basis.