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TITLE 26-INTERNAL REVENUE CODE to decedents dying after 1976 for provisions relating to a special rule with respect to DISC stock. 1971-Subsec. d). Pub. L. 92-178 added subsec. (d). 1958-Subsec. (d). Pub. L. 85-320 repealed subsec. (d), which made section inapplicable to restricted stock options described In section 421 which the em- ployee has not exercised at death. EmccTivE DATE OF 1976 AmmomENT Amendment of subsecs. (b)(6), (7) by section 1901(c)(8) 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 an Effective Date of 1976 Amendment note under section 2 of this title. Amendment of subsec. (d) by section 2005(a)(1) of Pub. L. 94-455 applicable in respect of decedents dying after Dec: 31, 1976, see section 2005(f) of Pub. L. 94- 455, set out as an Effective Date note under section 1023 of this title. EFFEcTIE DATE OF 1971 AMENDMENT Enactment of subsec. d) of this section by Pub. L. 92-178 applicable with respect to taxable years ending after Dec. 31, 1971, except that a corporation may not be a DISC for any taxable year beginning before Jan. 1972, see section 507 of Pub. L. 92-178, set out as an Effective Date of 1971 Amendment note under section 991 of this title. EFFEcTIvE DATE OF 1958 AMENDMENT Repeal of subsec. (d) of this section applicable with respect to taxable years ending after Dec. 31, 1956, but only 4n the case of employees dying after such date, see section 3 of Pub. L. 85-320, set out as an Effective Date of 1958 Amendment note under section 421 of this title. CRoss REFERENCES Definition of purchase for* purpose of determining basis of property received in' liltuidation of subsidiary as excluding a determination of basis under this sec- tion, see section 334 of this title. SEcTION RrMMzD TO\IN OTHER SECTIONS This section is referred to in sections 44, 179. 334, 382, 551, 644, 1001, 1023, 1223, 1232 of this title. § 1015. Basis of property acquired by gifts and trans. fers in trust (a) Gifts after December 31, 1920 If the property was acquired by gift after De- cember 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 ac- quired by gift, except that if such basis (adjust- ed 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 hy 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 rec- ognized to the grantor on such transfer under the law applicable to the year in which the transfer was made. () Gift or transfer in trust before January 1, 1921 If the property was acquired by gift or trans- fer 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 re- spect 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 quarter (or calendar year if the gift was made before January 1, 1971) in which such gift is made as the amount of such gift bears to the taxable gifts (as defined in sec- tion 2503(a) but computed without the deduc- tion allowed by section 2521) made by the donor during such calendar quarter or year. For purposes of the preceding sentence, the amount of any gift shall be the amount in- cluded with respect to such gift in determin- ing (for the purposes of section 2503(a)) the total amount of gifts made during the calen- dar quarter or year, 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 re- spect to each half of such gift (computed in the manner provided in paragraph (2)). Page 636 § 1015