2.    A part sale/part gift arises when property is transferred in return for consideration totaling less than the property’s fair market value.  To the extent that consideration is received, the transaction is treated as a sale.  To the extent that the FMV of the property exceeds the consideration, the transaction is generally treated as a gift.
a.    B of property acquired in a part sale/part gift transaction are, as one might expect, a hybrid of the cost B and gift B rules.  See 1.1015-4
b.    Reg. 1.1015-4(a):  the transferee takes a basis in the property received equal to the amount paid or the transferor’s A/B, whichever is greater, increased by the gift tax attributable to the net appreciation on the gift.
i.    note:  the transferor is deemed  to have sold the property for the amount of consideration received.
c.    A part sale/part gift can also arise when the property transferred is subject to an encumbrance that is assumed by the transferee or where the donor’s gift tax liability arising from the transfer is paid by the donee.  Consideration in the form of discharge of indebtedness effectuates a part sale.