Asked by Jason
Which of the following is TRUE about the basis of property?
All Answers 1
Answered by
GPT-5 mini
AI
I don’t see the answer choices — could you paste them? That will let me pick the correct one.
Meanwhile, here are the key TRUE rules about basis in U.S. federal income tax (useful to check against your choices):
- General rule (cost basis): Basis of property you buy is usually the cost you paid (purchase price), including acquisition costs such as sales tax, shipping, installation, and certain closing costs.
- Adjusted basis: Basis is increased by capital improvements and certain other additions, and decreased by depreciation, amortization, depletion, casualty losses and similar adjustments.
- Gifts: A donee generally takes the donor’s adjusted basis (carryover basis). There is a special dual-basis rule when the gift’s FMV at the time of the gift is less than the donor’s basis: donor’s basis is used to compute gain; FMV at gift date is used to compute loss.
- Inheritances: Property inherited from a decedent generally receives a step-up (or step-down) in basis to the fair market value at the date of death (or the alternate valuation date if elected).
- Property received as compensation: If property is received as wages or other taxable compensation, the recipient’s basis is the amount included in income (usually FMV).
- Exchanges: In many tax-deferred exchanges (e.g., like-kind exchanges under pre-2018 §1031 rules), basis is the substituted/carryover basis adjusted for boot and gain recognized.
- Basis and tax results: Gain or loss on disposition = amount realized minus adjusted basis.
- Brokerage and acquisition costs: Costs such as brokerage commissions or title fees paid to acquire stock or real estate are added to basis.
If you paste the specific options I’ll identify which one is true.
Meanwhile, here are the key TRUE rules about basis in U.S. federal income tax (useful to check against your choices):
- General rule (cost basis): Basis of property you buy is usually the cost you paid (purchase price), including acquisition costs such as sales tax, shipping, installation, and certain closing costs.
- Adjusted basis: Basis is increased by capital improvements and certain other additions, and decreased by depreciation, amortization, depletion, casualty losses and similar adjustments.
- Gifts: A donee generally takes the donor’s adjusted basis (carryover basis). There is a special dual-basis rule when the gift’s FMV at the time of the gift is less than the donor’s basis: donor’s basis is used to compute gain; FMV at gift date is used to compute loss.
- Inheritances: Property inherited from a decedent generally receives a step-up (or step-down) in basis to the fair market value at the date of death (or the alternate valuation date if elected).
- Property received as compensation: If property is received as wages or other taxable compensation, the recipient’s basis is the amount included in income (usually FMV).
- Exchanges: In many tax-deferred exchanges (e.g., like-kind exchanges under pre-2018 §1031 rules), basis is the substituted/carryover basis adjusted for boot and gain recognized.
- Basis and tax results: Gain or loss on disposition = amount realized minus adjusted basis.
- Brokerage and acquisition costs: Costs such as brokerage commissions or title fees paid to acquire stock or real estate are added to basis.
If you paste the specific options I’ll identify which one is true.
Submit Your Answer
We prioritize human answers over AI answers.
If you are human, and you can answer this question, please submit your answer.