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This article has been tagged since June 2006. In tax accounting, adjusted basis is the net cost of an asset after adjusting for various tax-related items. A tax (also known as a duty) is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (e. ...
It has been suggested that Accounting scholarship be merged into this article or section. ...
Calculation
Adjusted basis is calculated by beginning with an asset's original cost basis, and then making adjustments. Adjusted basis is calculated as follows: In business and accounting an asset is anything owned which can produce future economic benefit, whether in possession or by right to take possession, by a person or a group acting together, e. ...
+ Purchase costs (title & escrow fees, broker commissions, shipping, sales tax, etc.) Cost basis, or basis as used in United States tax law, is the original cost of property adjusted for factors such as depreciation. ...
+ Improvements (rehabilitation expenses & substantial repairs)
+ Legal fees (to defend or to perfect title to the property, zoning costs, etc.)
+ Selling costs (title & escrow fees, broker commissions, shipping, transfer fees, etc.)
- Accumulated depreciation, depletion, or amortization Declining-balance depreciation of a $50,000 asset with $6,500 salvage value over 20 years. ...
Amortization may refer to: Amortization (business), the allocation of a lump sum amount to different time periods. ...
- Casualty or theft Loss
- Other decreases to basis =
Adjusted Basis Adjusted basis is crucial for calculating capital gains and ordinary gains when an asset is sold. In business and accounting an asset is anything owned which can produce future economic benefit, whether in possession or by right to take possession, by a person or a group acting together, e. ...
A complete list of adjustments which increase or decrease basis is found in IRS Publication 551, Basis of Assets.
The adjusted basis for tax puposes are different than for financial accounting (GAAP) gains or losses on sales of capital assets.
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