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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 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 ...
Futures contracts and cost basis. Calculating the cost basis for futures contracts involves assessing the difference between a commodity’s local spot price and its associated futures price. For ...
Tax basis of property received by a U.S. person by gift is the donor's tax basis of the property. If the fair market value of the property exceeded this tax basis and the donor paid gift tax, the tax basis is increased by the gift tax. This adjustment applies only if the recipient sells the property at a gain. [7]
Taxes come into play almost any time you make money. So, if you make a profit off the sale of your property, you’ll probably run into capital gains tax.For example, if you purchased a property ...
In tax accounting, adjusted basis is the net cost of an asset after adjusting for various tax-related items. [1] Adjusted Basis or Adjusted Tax Basis refers to the original cost or other basis of property, reduced by depreciation deductions and increased by capital expenditures. Example: Muhammad buys a lot for $100,000. He then erects a retail ...
Sale price ($500,000) - Stepped-up original cost basis ($500,000) = $0.00 taxable capital gains On the other hand say that you hold the house for a year, during which time the price of this house ...
For example, let's say a taxpayer receives like-kind property worth $12,000 and $8,000 in cash in exchange for old property with a basis of $14,000. The basis in the new property is determined by subtracting the cash received ($8,000) from the basis in the old property ($14,000) and then adding the gain recognized ($6,000).