IRS Publication 551 — Basis of Assets
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“Caution: The average annual gross receipts test threshold amount may be adjusted for inflation. Publica- tion 551 may not be revised to reflect this amount. For tax years beginning after 2025, see the instructions for your applicable income tax return for the average annual gross receipts test threshold amount for the current tax year.”
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 can't 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 suggestions for future editions.
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Useful Items You may want to see: Publication 463 Travel, Gift, and Car Expenses 523 Selling Your Home 525 Taxable and Nontaxable Income 527 Residential Rental Property 530 Tax Information for Homeowners 537 Installment Sales 544 Sales and Other Dispositions of Assets 547 Casualties, Disasters, and Thefts 550 Investment Income and Expenses 559 Survivors, Executors, and Administrators 587 Business Use of Your Home 946 How To Depreciate Property Form (and Instructions)
706 United States Estate (and Generation-Skipping Transfer) Tax Return 706-A United States Additional Estate Tax Return 8594 Asset Acquisition Statement See How To Get Tax Help near the end of this publication for information about getting publications and forms.
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