A gift recipient’s (donee's) original or unadjusted basis (that is, the basis before adjustments made while the donee owned it) for property the donee acquires by gift is the same as the property's adjusted basis in the hands of the donor, or in the hands of the last preceding owner who didn't acquire the property by gift. But if the property's fair market value (FMV) at the date of the gift is lower than that adjusted basis, then the property's basis for determining loss is its FMV on that date. (Code Sec. 1015(a))