13:34
but also you don't need to tell them anything so lol
Warning
Info
LSDefine
Simple English definitions for legal terms
tax basis
Read a random definition: doctrine of the last antecedent
A quick definition of tax basis:
Tax basis is the value of something, like a house or a business, that is used to figure out how much tax you have to pay when you sell it. It includes things like how much you paid for it, any taxes or fees you had to pay, and any changes that happened to it while you owned it. The tax basis helps decide how much of the money you get from selling it is taxable. If you sell it for more than the tax basis, you only have to pay taxes on the extra money you made. If you sell it for less than the tax basis, you might be able to get a tax break. The tax basis can change if things happen to the property, like if it gets damaged or if you make improvements to it.
A more thorough explanation:
Tax basis refers to the cost or value of an asset used to determine equity or ownership for tax assessment, exchange, or sale. It includes the purchase price, taxes, transportation costs, and fees, and is adjusted based on what happens to the property during the owner's period of ownership.
When an asset is sold, the seller is only taxed on the amount of the sale that is above the basis. For example, if a company had a tax basis of $1,000,000 for a building and sold it for $1,200,000, the company would only be taxed on $200,000.
The basis of an asset is usually determined by its cost of acquisition, which includes amounts paid by cash, debt obligations, and other property or services. However, there are cases where the basis is determined by an asset's fair market value or the basis of a previous owner.
Activities such as property depreciation or rehabilitation expenses can change the basis of an asset. For example, if a business was bought for $5,000,000 and depreciated in value by $1,000,000, the cost basis would be lowered to $4,000,000. This means that the owner would incur taxes for anything over $4,000,000 when the property is sold.
Expenses that increase basis include rehabilitation expenses, extending utility service lines to a property, impact fees, legal fees for defending and perfecting title, and zoning costs. Expenses that decrease basis include deductions for clean-fuel vehicles and refueling property, amortization, depreciation, and depletion, postponed gain from the sale of a home, casualty and theft losses and insurance reimbursements, cancelled debt that is excluded from income, rebates from a manufacturer or seller, and easements.