Carryover and Substituted Basis
Property acquired in a non-taxable exchange takes the basis of the property exchanged. Examples of non-taxable exchanges include like kind exchanges, partnership liquidations, and corporate reorganizations.
Property acquired by distribution from a corporation or partnership may retain the same tax basis to the member as the entity's tax basis in certain circumstances. This basis is increased by any gain the member must recognize on the distribution.
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Famous quotes containing the words substituted and/or basis:
“Methinks the human method of expression by sound of tongue is very elementary, & ought to be substituted for some ingenious invention which should be able to give vent to at least six coherent sentences at once.”
—Virginia Woolf (1882–1941)
“Painting dissolves the forms at its command, or tends to; it melts them into color. Drawing, on the other hand, goes about resolving forms, giving edge and essence to things. To see shapes clearly, one outlines them—whether on paper or in the mind. Therefore, Michelangelo, a profoundly cultivated man, called drawing the basis of all knowledge whatsoever.”
—Alexander Eliot (b. 1919)