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In most places, there has to be a monetary amount for a deed transfer to be recorded. That's why gifted property is often shown with a sales price of $1, although the recipient never actually paid that dollar. The deed transfer has nothing to do with the actual basis. A donee will have the giver's basis; your client will have whatever s/he actually paid. Get the actual sales docs. Why do people try so hard to avoid cap gains tax? They don't realize that the cg tax rate is much lower than ordinary income tax rates, in some cases zero.