My client transferred a rental property for $109. The Adj basis is $22750. Can they claim the loss? Do they need to file a gift tax return?

[careychaputtax-g]

Transferred to unrelated party. Low Income Housing transferred to renter.

[BobKamman]

The fact that you're asking suggests it wasn't an arm's-length transaction.  Girlfriends are unrelated parties too, but that doesn't mean you can't be generous with them.  

[joshuabarksatlcs]

I treat all my girlfriends as related.  But please don't tell my wife.

[sjrcpa]

Or do you  mean you are generous with them?

[George4Tacks · Accepted solution]

If I read this correctly, your client had a very nice tenant for a long time and they decided to sell the unit to them for a ridiculously low price. This is NOT deductible. You do need to file a gift tax return. 

IF you had given it to a low income housing group that was a not for profit, you would still not get the deduction, but you could take it as a charitable deduction. 

[BobKamman]

Or, the tenant could have trashed it so badly before he discovered that they were barbecuing goats in the living room, that he just needed to wash his hands of it before the city arrested him for being a slumlord.

[careychaputtax-g]

Thank you! I appreciate your response and filed the gift tax return.