For tax purposes, use the basis 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. Your basis in some assets cannot be determined by cost. Before you can figure any gain or loss on a sale, exchange, or other disposition of property, or figure allowable depreciation, you must determine the adjusted basis. Increase your basis by items such as the cost of improvements that add to the value of the property, and decrease it by items such as depreciation previously allowable, reimbursements for casualty and theft losses, and gain from the sale of your old home on which tax was postponed.