The Value of Basis

Thanks for sharing this!

The Internal Revenue Service wants to know your basis. Why? Because basis can affect the amount of tax you owe, and the IRS thinks lots of folks are misreporting it.

In IRS-speak, basis is your investment in an asset. That asset can be your business property, your home, the securities in your portfolio, your jewelry—pretty much any property of value.

If you sell an asset and receive more money than you invested in it, you have a capital gain. Selling the item for less than your investment gives you a capital loss. Either way, the calculation—and the ultimate tax effect—depends on your basis.

That’s one reason Congress recently proposed having your broker report what you pay for your investments. However, the requirement is not yet law, so for now you’re on your own.

Still, there’s no reason to be lax about keeping track of basis. In addition to helping you avoid overpaying your taxes, accurate records can be invaluable if the IRS has questions.

You might also like these posts

Article – Preparing for Hurricane Season The Atlantic hurricane season begins June 1. While the 2014 season is expected to be a mild one, mild doesn’t mean storm-free. Getting ready early...
Article — Locked Out What’s on your computer? Your manuscripts? Work? Photos? What would you do if you were denied access to those files—if you were locked out by rogu...
Article — Tax Identity Theft Awareness Week Taxes are scary enough, without adding tax identity theft to the mix. The costs—$3.6 billion a year according to an estimate by the US Treasury In...

We write. Visit us in Carpenter Country, a magical place that, like our stories, is unreal but not untrue.

Tagged with: ,