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A wash sale is when you sell an asset, such as a stock or bond, for a loss but have purchased the same asset or a very similar one within 30 days before or after the sale.
After a sale is identified as a wash sale and if the replacement stock is bought within 30 days before or after the sale then the wash sale loss is added to the basis of the replacement stock. The basis adjustment preserves the benefit of the disallowed loss; the holder receives that benefit on a future sale of the replacement stock.
This exclusion – $250,000 for single filers and $500,000 for married, joint filers – is large enough that many sellers don't end up paying federal taxes on the capital gains from a home sale ...
These sums amounting to $106,800 can be added to the $300,000 purchase price to generate an adjusted cost basis of $406,800. Now your instead of owing taxes on $230,000, you’ll owe taxes on just ...
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.
If you qualify for an exemption, you first reduce your sale by the home’s adjusted basis. Then you reduce your profit by your exemption – either $250,000 or $500,000. The remainder is your ...
The reduction in basis occurs whether or not the business claims the depreciation. If the business then sells the asset for a gain (that is, for more than its adjusted cost basis), this part of the gain is called depreciation recapture. When selling certain real estate, it may be treated as capital gain.
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 ...