basis legal definition

The amount or value assigned to a taxpayerÂ’s cost of acquiring, or investment in, an asset. Primarily used when determining the taxpayerÂ’s gain or loss when the property is sold, bartered, or exchanged or the assetÂ’s depreciation.

The value of a taxpayerÂ’s basis in an asset, after making additions or subtractions to his or her original basis, to reflect certain events, such as capital improvements and depreciation, that affect the value of the property subsequent to the taxpayerÂ’s acquisition of or investment in the asset.

The basis of an asset transferred from one owner to another by gift or in trust at the time of the transfer.

See recovery.

The taxpayerÂ’s basis in an asset after the basis has been decreased to a certain value (usually its fair market value) upon a certain date or event. For example, the basis of inherited property is its fair market value as of the date of the decedentÂ’s death or an alternate valuation date and the decedentÂ’s stepped-down (or stepped-up) basis in the asset is the new ownerÂ’s original basis.

The taxpayerÂ’s basis in an asset after the basis has been increased to a certain value (usually its fair market value) upon a certain date or event.

The basis of one asset that substitutes for that of another asset when the first asset has been exchanged or otherwise transferred in return for the second asset. The taxpayer does not incur any gain or loss, but substitutes the basis of the asset she transferred to the property she acquired.