The determination of cost basis varies by asset type. For an equity security — commonly known as a stock, cost basis is generally the purchase price of the stock plus any additional acquisition costs, such as brokerage fees and commissions, plus any reinvested dividend distributions minus any return of capital distributions.
For a fixed asset, such as a piece of manufacturing equipment, the cost basis is generally the price paid for the asset plus any costs necessary to put it into service, such as delivery fees and installation charges, less accumulated depreciation. Cost Basis for Fixed Assets = Purchase Price + Implementation Costs – Accumulated Depreciation
Here, if the purchase price is above or below the amount due at maturity of the debt (known as the par value), the difference is paid down gradually over time (or amortized to par) until maturity. Essentially, this results in a continual, gradual change in the cost basis.
You have a capital gain if you sell the asset for more than your adjusted basis. You have a capital loss if you sell the asset for less than your adjusted basis. Losses from the sale of personal-use property, such as your home or car, aren't tax deductible.
Gains and losses are calculated by finding the difference between the adjusted basis of the asset disposed and the amount realized on the exchange. The adjusted basis is equal to the basis of the asset, the value required to initially obtain the asset, plus or minus any relevant tax-related items.
Your adjusted basis is generally your cost in acquiring your home plus the cost of any capital improvements you made, less casualty loss amounts and other decreases. For more information on basis and adjusted basis, refer to Publication 523, Selling Your Home.
Adjusted basis is the cost basis of an asset adjusted for various events during its ownership. It is usually used to calculate an owner's capital gain or loss for income tax purposes when the property is sold, or to calculate an inheritor's tax basis when they receive property from a testator's estate.
The original purchase price of the asset, minus all accumulated depreciation and any accumulated impairment charges, is the carrying amount of the asset. Subtract this carrying amount from the sale price of the asset. If the remainder is positive, it is a gain. If the remainder is negative, it is a loss.
What factors determine the gain or loss on the sale of a PPE asset? Answer: The gain or loss on the sale of a PPE asset is calculated as the difference between the sales proceeds and the asset's net book value.
Basis is the amount your home (or other property) is worth for tax purposes. When you sell your home, your gain (profit) or loss for tax purposes is determined by subtracting its basis on the date of sale from the sales price (plus sales expenses, such as real estate commissions).
To calculate your basis, the average cost method takes the cost of all the shares you have purchased and divides it by the number of shares.
If your property is personal-use property or isn't completely destroyed, the amount of your casualty loss is the lesser of: The adjusted basis of your property, or. The decrease in fair market value of your property as a result of the casualty.
Adjusted basis refers to how much you lose or gain when you sell property. Before you can determine your profit or loss from the sale or exchange of property, you must factor in things such as depreciation or money you invested in improvements to the property prior to selling it.
So, if, for instance, an asset was purchased for $10,000 and then sold a year later after registering $500 in depreciation and $1,000 being spent on enhancements, it would have an adjusted basis of $10,500: $10,000 - $500 + $1,000 = $10,500.
Your basis is essentially your investment in an asset—the amount you will use to determine your profit or loss when you sell it. The higher your basis, the less gain there is to be taxed—and therefore, the lower your tax bill.