To determine her loss, she needs to know her tax basis. When you give property, such as stock, the recipient’s tax basis used for determining gain or loss is usually your basis. More specifically, since the value of the property equaled or exceeded your basis at the time you gave it to your niece, her basis for determining loss is your basis (plus all or part of gift tax paid on the gift). If the stock had been worth less than your basis when you gave it to your niece, her basis for determining loss would be the date-of-gift value.
A statutory term used to figure your profit or loss on a sale or exchange. Generally, it is sales proceeds plus mortgages assumed or taken subject to, less transaction expenses, such as commissions and legal costs.