in 2011, faber purchased a classic car to restore for $12,000. however, faber is too busy to work on the car and gives it to an offspring, reign, in 2022. at this time, the fair market value of the car has declined to $10,000. faber paid no gift tax on the transaction. reign personally completes some of the restoration, with out-of-pocket costs of $5,000. reign later sells the car for $30,000. reign's recognized gain on the sale of the car is $13,000.