Shontelle received a gift of income-producing property with an adjusted basis of $49,000 to the donor and fair market value of $35,000 on the date of gift. No gift tax was paid by the donor. Shontelle subsequently sold the property for $41,000. 

What is the recognized gain or loss? What is the recognized gain or loss if the taxpayer later sells the property for $30,000 or $55,000?

 What is Shontelle’s holding period in the asset under each of these scenarios? Under which of these scenarios would you suggest (or not suggest) that Shontelle make a gift of the property? What if Shontelle passed away when the asset had an adjusted basis of $49,000 and a FMV of $55,000. 

What would the basis of the property be to Shontelle’s heir? If Shontelle’s heir sold the property six months after she died for $57,000, what would be the heir’s holding period and recognized gain (or loss)? Is it generally better to leave appreciated or depreciated property to your heirs? Why?