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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.
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.
1031(d) defines the basis calculation for property acquired during a like-kind exchange. It states that the basis of the new property is the same as the basis of the property given up, minus any money received by the taxpayer, plus any gain (or minus any loss) recognized on the transaction.
The IRS allows married couples to exclude up to $500,000 in home sale profits from capital gains taxes. Individuals can exclude up to $250,000.
The cost basis for stocks and mutual funds is generally the price you paid when you purchased the asset, plus any other trading costs. However, there are several methods to calculate cost basis ...
For stocks or bonds, the cost basis is 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. Your Taxes ...
A stepped-up basis can be higher than the before-death cost basis, which is the benefactor's purchase price for the asset, adjusted for improvements or losses. Because taxable capital-gain income is the selling price minus the basis, a high stepped-up basis can greatly reduce the beneficiary's taxable capital-gain income if the beneficiary ...
The Modified Accelerated Cost Recovery System (MACRS) is the current tax depreciation system in the United States. Under this system, the capitalized cost (basis) of tangible property is recovered over a specified life by annual deductions for depreciation. The lives are specified broadly in the Internal Revenue Code.