basis

Fundamental principle; groundwork; support; the foundation or groundwork of anything; that upon which anything may rest or the principal component parts of a thing.

Accounting.

Term used in accounting, especially in tax accounting, to describe the value assigned to an asset for the purpose of determining gain (or loss) on the sale or transfer or in determining value in the hands of a donee. Acquisition cost, or some substitute therefor, of an asset used in computing gain or loss on disposition or retirement. The amount assigned to an asset for income tax purposes. For assets acquired by purchase, the basis would be cost [I.R.C. No. 1012]. Special rules govern the basis of property received by virtue of another's death [I.R.C. No. 1014] or by gift [No. 1015], the basis of stock received on a transfer of property to a controlled corporation [No. 358], the basis of the property transferred to the corporation [No. 362], and the basis of property received upon the liquidation of a corporation [No.No. 334 and 338].

@ adjusted basis

The cost of property acquired, increased for any capital improvements and decreased by the amount of depreciation allowed or allowable. I.R.C. No. 1011.

+ adjusted basis

The cost or other basis of property reduced by depreciation allowed or allowable and increased by capital improvements.

See basis

@ carryover basis

The basis of property acquired from a decedent dying after December 1979 is the basis of the property in the hands of the decedent immediately preceding death. The basis is further adjusted for transfers of appreciated property, personal items, and exceptions for small estates. I.R.C. No. 1023.

@ stepped-up basis

In tax accounting, value placed on property which is acquired in a taxable transaction or purchase. I.R.C. No. 1012.

The basis of property acquired through inheritance, bequest, or devise from a decedent, is the fair market value of the property on the date of death or the fair market value on the alternate valuation date-six months from the date of death. The value is often higher than in the hands of the decedent, resulting in a stepped-up basis. I.R.C. No. 1014.

The basis of assets acquired by gift is the donors basis increased either by the amount of the gift tax paid (for gifts received before 1977) or the portion of the gift tax paid which is due to the increase in the value of the gift (for gifts received after 1976). I.R.C. No. 1015.

@ substituted basis

In tax accounting, the basis of property acquired in an exchange in which a gain or loss is not recognized, is the basis of the property transferred, except where the property acquired is subject to a lien. I.R.C. No. 1031.

See also accrual basis

+ substituted basis

In taxation, the basis of an asset determined by reference to the basis in the hands of a transferor, donor or grantor or by reference to other property held at any time by the person for whom the basis is to be determined. I.R.C. No. 1016(b)

@ basis of bargain

That on which any affirmation of fact or promise relating to goods sold is predicated, creating an express warranty. U.C.C. No. 2-313(lXa).

See essence of the contract

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