1. A fundamental principle; an underlying condition.

2. Tax. The value assigned to a taxpayer’s investment in property and used primarily for computing gain or loss from a transfer of the property. ? When the assigned value represents the cost of acquiring the property, it is also called cost basis.

¡ª Also termed tax basis. [Cases: Internal Revenue 3195; Taxation 996.1¨C998. C.J.S. Internal Revenue ¡ì¡ì 114¨C115; Taxation ¡ì¡ì 1726, 1732¨C1734.] Pl. bases.

adjusted basis. Basis increased by capital improvements and decreased by depreciation deductions. [Cases: Internal Revenue 3197; Taxation 996.1¨C998. C.J.S. Internal Revenue ¡ì 119; Taxation ¡ì¡ì 1726, 1732¨C1734.]

¡°[I]t is well to consider the word ¡®adjusted¡¯ in the term ¡®adjusted basis.¡¯ Often, after property is acquired, certain adjustments (increases or decreases to the dollar amount of the original basis) must be made. After these adjustments, the property then has an ¡®adjusted basis.¡¯ ¡± Michael D. Rose & John C. Chommie, Federal Income Taxation ¡ì 6.04, at 300 (3d ed. 1988).

adjusted cost basis. Basis resulting from the original cost of an item plus capital additions minus depreciation deductions.

carryover basis. The basis of property transferred by gift or in trust, equaling the transferor’s basis.

¡ª Also termed substituted basis. [Cases: Internal Revenue 3201.]

stepped-up basis. The basis of property transferred by inheritance. ? Stepped-up basis equals the fair market value of property on the date of the decedent’s death (or on the alternate valuation date). [Cases: Internal Revenue 3205. C.J.S. Internal Revenue ¡ì 116.]

substituted basis.

1. The basis of property transferred in a tax-free exchange or other specified transaction. [Cases: Internal Revenue 3184. C.J.S. Internal Revenue ¡ì¡ì 120¨C121, 124.]

2. See carryover basis.

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