adjusted basis (redirected from Modified Tax Basis)

Adjusted basis

Price from which to calculate and derive capital gains or losses upon sale of an asset. Account actions such as any stock splits that have occurred since the initial purchase must be accounted for.

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Adjusted Basis

The cost of an asset after various deductions and additions such as depreciation, brokerage fees, or dividends. Tax on such an asset is calculated from the adjusted basis rather than the price that was actually paid.

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adjusted basis

The acquisition cost of an asset after it has been adjusted to reflect changes in cost basis that result from the occurrence of certain events following the day of acquisition. For example, stock dividends, stock splits, and dividends deemed to be returned on capital cause a downward adjustment in the cost basis of a security. Conversely, commissions result in an upward adjustment in the cost basis. Adjusted basis is used in calculating gains and losses for tax purposes.

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adjusted basis

A tax and accounting term referring to the original acquisition cost of a property, with the following adjustments:

• Depreciation, which reduces the basis

• Capitalized closing costs, which increase the basis

• Capital improvements, such as a new roof, which increase the basis

The difference between the adjusted basis and the ultimate sale price of a property will be the taxable profit on the sale.The adjusted basis is an extremely important tax concept,and one which it is important to master in order to comfortably evaluate properties.

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Adjusted Basis

The cost or other original basis of property reduced by adjustments such as depreciation allowed or allowable and casualty losses, and increased by the cost of capital improvements, expenses of purchase, and other adjustments.