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.
Read more about this topic: Tax Basis
Famous quotes containing the words substituted and/or basis:
“A point of view can be a dangerous luxury when substituted for insight and understanding.”
—Marshall McLuhan (1911–1980)
“Knighterrantry is a most chuckleheaded trade, and it is tedious hard work, too, but I begin to see that there is money in it, after all, if you have luck. Not that I would ever engage in it, as a business, for I wouldn’t. No sound and legitimate business can be established on a basis of speculation. A successful whirl in the knighterrantry line—now what is it when you blow away the nonsense and come down to the cold facts? It’s just a corner in pork, that’s all.”
—Mark Twain [Samuel Langhorne Clemens] (1835–1910)