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