What does adjusted basis mean on the CPA exam?
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Adjusted basis. What the taxpayer has invested in property for tax purposes: cost, plus improvements, less depreciation taken. Gain is what the sale price exceeds it by.
Defined against Sec. 1011.
Related terms
- reasonable basis: The lowest standard at which a return position may be taken without penalty if it is disclosed.
- contractual basis: A special-purpose framework built from the terms of a contract, used when two parties agree how the numbers will be prepared for their own purposes.
- stock basis: A shareholder's investment in S corporation stock for tax purposes.
- tax basis: What an asset or liability is worth for tax purposes, which is often not what it is worth for accounting.
- carryover basis: Basis that follows the property from the previous owner instead of resetting to what was paid.
- basis of accounting: The rule for WHEN something is recorded: cash when money moves, accrual when it is earned or incurred, modified accrual somewhere between.