This is archived information that pertains only to the 1996 Tax Year If you are looking for information for the current tax year, go to the Tax Prep Help Area . Basis is your investment in property for tax purposes. Use the basis of your property to figure depreciation, amortization, depletion, casualty losses, and any gain or loss on the sale or exchange of the property. The basis of property you buy is usually its cost. The cost is the amount you pay for it in cash, debt obligations, or other property or services.
Cost includes sales tax and other expenses connected with the purchase.
The basis of stocks or bonds is the purchase price plus any costs of purchase such as commissions and recording or transfer fees. There are other ways to determine the basis of stocks and bonds depending on how you acquired them. Refer to Publication 550, Investment Income and Expenses, for more information. For information on the basis of mutual fund share, read Publication 564, Mutual Fund Distributions. Your basis in some assets cannot be determined by cost.