Number: RL34662
Title: Tax Basis: What Is It? Why Is It Important?
Authors: Carol A. Pettit, American Law Division 
Abstract: This report provides a simplified explanation of the meaning of "tax basis," the factors that determine a taxpayer's tax basis, and some of the ways in which tax basis is used. It is intended to address some situations encountered by individual taxpayers and small businesses. It does not address tax basis as it applies to corporate assets nor as it applies to shareholders' basis in stock received in exchange for property contributed to a corporation. The tax basis and sale of inventory is also outside of the scope of this report, as is the basis of property that is converted from personal use to business use. The basis rules are found in the Internal Revenue Code (I.R.C.) §§ 1011-1023.
Pages: 7
Date: November 25, 2008