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You can sell your primary residence and avoid paying capital gains taxes on the first $250,000 of profits if your tax-filing status is single, and up to $500,000 if married and filing jointly.
The cost basis of an asset is important to you for two primary reasons – tax planning and investment planning. These two reasons are related because only with the proper investment planning can ...
Buy low and sell high is one of the most fundamental rules of stock investing. Knowing the cost basis of the stocks you purchase can help you estimate your potential profit should you decide to sell.
The capital gain that is taxed is the excess of the sale price over the cost basis of the asset. The taxpayer reduces the sale price and increases the cost basis (reducing the capital gain on which tax is due) to reflect transaction costs such as brokerage fees, certain legal fees, and the transaction tax on sales.
Basis (or cost basis), as used in United States tax law, is the original cost of property, adjusted for factors such as depreciation. When a property is sold, the taxpayer pays/(saves) taxes on a capital gain /(loss) that equals the amount realized on the sale minus the sold property's basis.
At the end year 1 the asset is recorded in the balance sheet at cost of $100. No account is taken of the increase in value from $100 to $120 in year 1. In year 2 the company records a sale of $115. The cost of sales is $100, being the historical cost of the asset. This gives rise to a gain of $15 which is wholly recognized in year 2.
Selling an investment typically has tax consequences. To figure out whether you need to report a gain -- or can claim a loss -- after you sell, you must start with the cost basis for that investment.
Free tax filing with IRS Direct File: What you need to know. The IRS Direct File program, which lets you prepare and file your federal return for free, is expanding to 25 states for the 2025 tax season.