Increases in Basis. Increases in basis result from improvements to property that have a useful life of more than one year. Generally the cost of improvements which add to the basis of an asset include supplies and materials purchased for major repairs or additions, legal fees, recording fees, and similar charges. Such increases in the basis are added to the capital account of the asset improved, resulting in a higher book value. Decreases in Basis.
Basis is reduced by any event that represents a return of capital.
Basis is decreased by the amount of any casualty related insurance or other reimbursement received and by any deductible loss not covered by insurance. Amounts spent after the casualty for restoration of property to its pre-casualty state of repair increase the basis. Additional Information IRS Publication 551, Basis of Assets . The information contained in this NebFact is for educational purposes only. Tax is complicated and the information presented here has necessarily been simplified.