Basis

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Definition: Basis

Basis

Quick Summary of Basis

For income and capital gains tax purposes, the value that is used to determine profit or loss when property is sold. Often the basis is what you paid for the property, “adjusted” to reflect improvements made or damage incurred while you own the property. See stepped-up basis, carryover basis.

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What is the dictionary definition of Basis?

Dictionary Definition

n. the original cost of an asset to be used to determine the amount of capital gain tax upon its sale. An “adjusted basis” includes improvements, expenses, and damages between the time the original basis (price) is established and transfer (sale) of the asset. “Stepped up basis” means that the original basis of an asset (especially real property) will be stepped up to current value at the time of the death of the owner, and thus keep down capital gain taxes if the beneficiary of the dead person sells the asset. Example: Daniel Oldboy buys a house for $30,000, and when he dies the place is worth $250,000. When his son and heir receives the property, the son can sell it for $250,000 with no capital gains tax, but if Dad had sold it before his death there would have been capital gains on $220,000. It can be more complicated than this simple example with assets jointly held with a spouse, exchanges of property, and other variations which require professional assistance.

Full Definition of Basis

  1. The purchase price, including commissions and other expenses, that is used to determine capital gains and capital losses for tax purposes. This can be determined by several methods. For a purchased investment, the basis is the amount paid. If inherited, the basis is the value of the stock on the date of the original owner’s death. If received as a gift, the basis is the amount that was originally paid for the investment by the giver, unless the market value of the investment on the date the gift was given was lower. also called cost basis or tax basis.
  2. The difference between the cash price and the futures price of a given commodity.

Synonyms For Basis

cost basis
tax basis

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To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/basis/
Modern Language Association (MLA):
Basis. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
April 23, 2024 https://payrollheaven.com/define/basis/.
Chicago Manual of Style (CMS):
Basis. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
https://payrollheaven.com/define/basis/ (accessed: April 23, 2024).
American Psychological Association (APA):
Basis. PayrollHeaven.com. Retrieved April 23, 2024
, from PayrollHeaven.com website: https://payrollheaven.com/define/basis/

Definition Sources

Definitions for Basis are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 21st November, 2021 | 0 Views.