Introduction
Basis is the amount of your investment in property for tax purposes. Use the basis of property to figure depreciation, amortization,
depletion, and
casualty losses. Also use it to figure gain or loss on the sale or other disposition of property. You must keep accurate records
of all items that
affect the basis of property so you can make these computations.
This publication is divided into the following sections.
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Cost Basis
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Adjusted Basis
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Basis Other Than Cost
The basis of property you buy is usually its cost. You may also have to capitalize (add to basis) certain other costs related
to buying or
producing the property.
Your original basis in property is adjusted (increased or decreased) by certain events. If you make improvements to the property,
increase your
basis. If you take deductions for depreciation or casualty losses, reduce your basis.
You cannot determine your basis in some assets by cost. This includes property you receive as a gift or inheritance. It also
applies to property
received in an involuntary conversion and certain other circumstances.
Comments and suggestions.
We welcome your comments about this publication and your suggestions for future editions.
You can e-mail us while visiting our web site at
www.irs.gov.
You can write to us at the following address:
Internal Revenue Service
Technical Publications Branch
W:CAR:MP:FP:P
1111 Constitution Ave. NW
Washington, DC 20224
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including the area code, in
your correspondence.