Publication 225 |
2000 Tax Year |
Introduction
Basis is the amount of your investment in property for tax
purposes. Use the basis of property to figure the gain or loss on the
sale, exchange, or other disposition of property. Also use it to
figure the deductions for depreciation, amortization, depletion, and
casualty losses. If you use property for both business and personal
purposes, you must allocate the basis based on the use. Only the basis
allocated to the business use of the property can be depreciated.
Your original basis in property is adjusted (increased or
decreased) by certain events. If you make improvements to the
property, increase your basis. If you take deductions for depreciation
or casualty losses, reduce your basis.
It is important to keep an accurate record of your basis. For
information on keeping records, see chapter 1.
Generally, the higher your basis for an asset, the less gain you
will have to report on its sale. The higher your basis in a
depreciable asset, the higher your depreciation deductions.
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