Adjusted Basis or Adjusted Tax Basis refers to the original cost or other basis of property, reduced by depreciation deductions and increased by capital expenditures.
Example: Brad buys a lot for $100,000. He then erects a retail facility for $600,000, then depreciates the improvements for tax purposes at the rate of $15,000 per year. After three years his adjusted tax basis is $655,000 .
Adjusted basis is one of two variables in the formula used to compute gains and losses when determining gross income for tax purposes. The Amount Realized – Adjusted Basis tells the amount of Realized Gain (if positive) or Realized Loss (if negative).
Read more about Adjusted Basis: Statutory Definition, Calculation
Famous quotes containing the words adjusted and/or basis:
“The treatment of the incident of the assault upon the sailors of the Baltimore is so conciliatory and friendly that I am of the opinion that there is a good prospect that the differences growing out of that serious affair can now be adjusted upon terms satisfactory to this Government by the usual methods and without special powers from Congress.”
—Benjamin Harrison (1833–1901)
“Adolescents, for all their self-involvement, are emerging from the self-centeredness of childhood. Their perception of other people has more depth. They are better equipped at appreciating others’ reasons for action, or the basis of others’ emotions. But this maturity functions in a piecemeal fashion. They show more understanding of their friends, but not of their teachers.”
—Terri Apter (20th century)