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LSDefine

Simple English definitions for legal terms

carryover basis

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A quick definition of carryover basis:

Carryover basis is a way to figure out how much tax someone owes when they get a gift of something valuable, like a stock or a piece of property. Normally, when you sell something for more than you paid for it, you have to pay taxes on the profit. But if you get something as a gift, you didn't pay for it, so there's no "cost basis" to figure out the profit. With carryover basis, you use the original cost basis of the person who gave you the gift to figure out how much profit you made when you sell it. This is different from a step-up basis, which is used when you inherit something and the cost basis is adjusted to the value of the item when the person who gave it to you died.

A more thorough explanation:

Carryover basis is a way to calculate taxes on a gifted asset. When someone receives a gift, they don't have a purchase price to use for calculating capital gains taxes. Carryover basis uses the original purchase price of the asset to calculate the gain.

Tom gave Rachel a share of Pear Inc. as a gift when the share price was $100. Later, Rachel sold the share when the price rose to $200. Under carryover basis, Rachel would owe taxes on the $100 capital gain ($200 - $100 = $100).

Another example: Rachel inherited a share of Pear Inc. from Tom's will when the stock price was $150. In this case, a step-up basis would apply, and Rachel would only owe taxes on the $50 capital gain ($200 - $150 = $50).

Carryover basis is used when someone receives a gift and needs to calculate capital gains taxes. It uses the original purchase price of the asset to determine the gain. In the first example, Rachel received a share of Pear Inc. as a gift and sold it later. The gain was calculated using the original purchase price of $100. In the second example, Rachel inherited the share and the gain was calculated using the market value at the time of inheritance.

carryover | cartel

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medicine is a scam
join the ethically ambiguous legal field instead
Dkk
18:57
I want to meet an attorney that defends clients who run into flat earth problems. I want an attorney that knows and believes in flat earth theory.
19:05
i want a flat earther for president. i want a guy who posts on 4chan for president. i want someone who mogs for president.
Dkk
19:18
Exactly. My version of that awful poem.
Dkk
19:19
I can accept a president with maybe one or two of the poems traits hut good God, all of them??? No ty.
windyMagician
19:20
president who respects sex is crazy
windyMagician
19:20
we had bill clinton already
Dkk
19:21
Bill Clinton, first and last black president
windyMagician
19:23
I want to go running but my leg feels weird
windyMagician
19:23
it doesn't hurt its just tingly
Dkk
19:26
It needs more alcohol. You tingle when your nerves need watering.
19:27
try stretching it maybe to see what's up
windyMagician
19:27
stretches make me think it's just soreness
windyMagician
19:27
I'm sober lol
Dkk
19:38
Anyone else get the google notification that your LSD password has been compromised lol. LSD got hacked.
20:48
what.jpg @Dkk
CynicalOops
21:03
You think you just fell out of a coconut tree?
jackfrost11770
21:10
nope dk
CynicalOops
22:37
Calvinamala Harris
jackfrost11770
23:16
should i start using letterboxed again
Dkk
23:25
@jackfrost11770: if you want but like it aint for me
dk do u ever eat at bk
Dkk
23:48
@chickenburgahfart: I would do that in the Army if really desperate for food or if I had to work through lunch. One of the few fast food places I go to.
bk so slept on
Dkk
0:23
I will take In N Out everyday over it when I can though.
texaslawhopefully
1:22
In N Out is not only the best fast food place, but the prices too are fantastic
Dkk
1:27
Indeed, indeed.
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