Publication 551 - Introductory Material
Assets held on January 1, 2001. If you made the election to treat an asset as sold and then reacquired on January 1, 2001 (January 2, 2001, for readily tradable
stock), and you
hold the asset for more than 5 years from that date, any future gain on the asset is eligible for an 18% (instead of 20%)
capital gains tax rate. If
you made the election, your basis in the reacquired asset is its closing market price (for readily tradable stock) or fair
market value (for any other
capital asset or property used in a trade or business) on the date you reacquired it.
Basis is the amount of your investment in property for tax purposes. Use the basis of property to figure depreciation, amortization,
depletion, and
casualty losses. Also use it to figure gain or loss on the sale or other disposition of property. You must keep accurate records
of all items that
affect the basis of property so you can make these computations.
This publication is divided into the following sections.
-
Cost Basis
-
Adjusted Basis
-
Basis Other Than Cost
The basis of property you buy is usually its cost. You may also have to capitalize (add to basis) certain other costs related
to buying or
producing the property.
Your original basis in property is adjusted (increased or decreased) by certain events. If you make improvements to the property,
increase your
basis. If you take deductions for depreciation or casualty losses, reduce your basis.
You cannot determine your basis in some assets by cost. This includes property you receive as a gift or inheritance. It also
applies to property
received in an involuntary conversion and certain other circumstances.
Comments and suggestions.
We welcome your comments about this publication and your suggestions for future editions.
You can e-mail us while visiting our web site at
www.irs.gov.
You can write to us at the following address:
Internal Revenue Service
Technical Publications Branch
W:CAR:MP:FP:P
1111 Constitution Ave. NW
Washington, DC 20224
We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number,
including the area code, in
your correspondence.
Useful Items - You may want to see:
Publication
-
463
Travel, Entertainment, Gift, and Car Expenses
-
523
Selling Your Home
-
525
Taxable and Nontaxable Income
-
527
Residential Rental Property
-
530
Tax Information for First-Time Homeowners
-
535
Business Expenses
-
537
Installment Sales
-
544
Sales and Other Dispositions of Assets
-
550
Investment Income and Expenses
-
559
Survivors, Executors, and Administrators
-
564
Mutual Fund Distributions
-
587
Business Use of Your Home
-
946
How To Depreciate Property
See How To Get Tax Help near the end of this publication for information about getting publications and forms.
