Determining Tax Basis of Property

Author: Jennifer Kowal

CPE Credit:  2 hours for CPAs
2 hours Federal Tax Related for EAs and OTRPs
2 hours Federal Tax Law for CTEC

Understand Intricacies of Tax Basis for Property Acquired by Exchanges, Gift, Inheritance or Other Means

The tax code defines basis as the "cost" of property, but in many cases it can be difficult to determine what this means. Of course it means the amount paid when property is purchased for cash, but what if property is acquired in an exchange, a non-recognition transaction, in exchange for services, or received by inheritance? Special basis rules apply in all of these scenarios. Additionally, special rules regarding allocation of basis when only part of a property is sold may surprise taxpayers. Finally, the effects on basis of depreciation and bonus depreciation are significant.

Publication Date: June 2018

Designed For
Tax practitioners at all levels who provide advice and return preparation involving sales of property.

Topics Covered

  • General Tax Basis Rules -- definition of "cost" basis
  • Special Rules re: basis of property received by gift or bequest
  • Rules re: allocation of basis when not all the property is sold
  • Basis effects of depreciation, including failing to claim allowable depreciation
  • Basis of property received in exchanges, including non-recognition exchanges

Learning Objectives

  • Describe general tax basis rules and outcome of common "cost" basis situations.
  • Identify rules that apply in determining how to allocate basis, or determine which basis to use, when not all of a taxpayer's property is sold.
  • Explain the special rules that apply to property received by gift or inheritance.
  • Recognize the effects of depreciation and non-recognition exchanges on calculating basis.

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
Basic understanding of tax basis.

Advance Preparation
None

Registration Options
Quantity
Fees
Regular Fee $55

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