Concept in 60 seconds: tax basis Basis is your tax "cost" in an asset. Gain or loss on a sale is: Amount realised − adjusted basis Adjusted basis starts with what you paid, goes up for improvements, and goes down for depreciation you've claimed. Example: you buy a building for $100,000, add $20,000 of improvements and claim $30,000 of depreciation. Adjusted basis = $100,000 + $20,000 − $30,000 = $90,000. Sell it for $150,000 and the gain is $60,000. Basis questions show up everywhere in REG: gifts, inheritances, partnerships and S corporations all have their own basis rules. Get the start…
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