Problem $11-61($LO$.9)$

In the current year, Abe gives an interest in a passive activity to his daughter, Andrea. The value of the interest at the date of the gift is $$25,000,$ and its adjusted basis to Abe is $$13,000.$ During the time that Abe owned the investment, losses of $$3,000$ could not be deducted because of the passive activity loss limitations$.$ What is the tax treatment of the suspended passive activity losses to Abe and Andrea?

In a disposition by gift of an interest in a passive activity, any suspended losses are added to the basis of the property. Therefore, Andrea's basis in the property is $.$ Abe is not allowed to deduct the suspended losses in the year of disposition.