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@parvitstax wrote:

Does that mean if the sale is for $430k and Equity Gift is $170k the buyer's basis when they sell would be $260k? 

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Yes, they sold it for $260k.

But because there is a 1099-S that says $430k, you may need to get creative.  Some preparers add the $170 to Basis or Selling Expenses to get the gain to show correctly on the tax return.  Some may report it as $260k, but then create a second sale/entry showing a $170k loss and call it an adjustment to home sale.  Others just report it as $260k and tell the client to wait for an IRS notice saying they owe a bazillion dollars, then respond to the IRS notice.