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FMV |
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FMV
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| Generally, this is not a problem when the FMV of the property contributed to the corporation equals its basis in the transferor's hands. This ruling concluded that: (1) F realized capital gain based on the difference between F's basis in the property and the annuity's PV; (2) this gain was reported ratably over F's life expectancy; (3) the investment in the contract to compute the exclusion ratio was F's basis in the property transferred; (4) the excess of the property's FMV over the annuity's PV was a gift from F to S; and (5) the prorated capital gain reported annually was derived from the taxable portion of each payment. When a donor transfers encumbered property to a charity and the property's FMV exceeds his or her basis, the donor, will recognize income. |
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