Adjustments To Basis
The tax basis of an asset subject to cost recovery must be reduced by deductions allowed for such cost recovery. For example, if Joe claimed $25,000 of depreciation deductions on his building, his adjusted basis would be the $90,000 as above less $25,000, or $65,000. Cost recovery deductions may include depreciation, amortization, and deducted losses or declines in value. Some jurisdictions (e.g., Germany) allow a deduction for decline in value of certain assets, which reduces tax basis.
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Famous quotes containing the word basis:
“Compassion has no place in the natural order of the world which operates on the basis of necessity. Compassion opposes this order and is therefore best thought of as being in some way supernatural.”
—John Berger (b. 1926)