[Need2PassREG]

I am having trouble understanding this question…

On April 1, 2015, George Hart, Jr., acquired a 25% interest in the Wilson, Hart and Company partnership by gift from his father. The partnership interest had been acquired by a $50,000 cash investment by Hart, Sr., on July 1, 2000. The tax basis of Hart, Sr.’s partnership interest was $60,000 at the time of the gift. Hart, Jr., sold the 25% partnership interest for $85,000 on December 17, 2015. What type and amount (before consideration of the capital gain deduction) of capital gain should Hart, Jr., report on his 2015 tax return?

A. A long-term capital gain of $25,000
B. A short-term capital gain of $25,000
C. A long-term capital gain of $35,000
D. A short-term capital gain of $35,000

My approach: Donor’s basis = $50,000 / FMV @ time of gift = $60,000 / Hart Jr. sold the 25% interest for $85,000. So then since the FMV is greater than the donor’s basis we use the $50,000 as the basis. We take $85,000-$50,000 = $35,000 – Wrong answer!!

Do we not take the lower of donor’s cost or FMV as the donee’s basis when the donee sells the gift at a gain? My assumption is that the IRS wants a higher gain so that Hart Jr. is taxed more.