carryover basis

carryover basis

In tax accounting, the retention of an earlier basis (adjusted acquisition cost) in property even though the property has changed hands.This happens most often in two instances: (1) Someone acquires property by gift. The basis is the same as it was in the hands of the donor, adjusted upward for any gift taxes paid by the donor.(2) In a 1031 exchange,in which like-kind property is exchanged for other like-kind property in a sort of perfectly legal accounting sleight of hand, the basis in property acquired is the same as the basis in the property given up,even though both might currently have substantially different fair market values.

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They look at the federal estate tax from perspectives of the gross estate, deductions, computing tax liability, carryover basis rules applicable to some decedents dying in 2010, and limitation on stepped-up basis.
In a taxable transaction, the acquirer takes a fair value tax basis in the net assets acquired; in a nontaxable transaction, the acquirer takes a carryover basis in the net assets but a fair value basis in any acquired stock; in a nontaxable exchange, the acquirer takes a carryover basis in both the net assets and any acquired stock.
However, the target's assets carry over at their historic tax basis ("carryover basis," or "inside basis"); the tax attributes (losses, credits, etc.) also carry forward but may be subject to certain limitations.
(22) The combination of enhanced record-keeping capabilities and third-party basis reporting now make a carryover basis regime eminently more feasible than it was in years past.
If the transferor chooses to allow the transferee to have the deductions, then the rules for corporate carryover basis transfers apply.
* In general, the basis in the replacement property will be the same as the adjusted basis in the property sold, known as the "carryover basis."
In these cases, the cost basis is "carryover basis" and the transaction is tax free with no current income taxes due (IRC Section 1041 and IRC Section 72(e)(4)(C)(ii)).
In order to calculate the new tax basis in Vineyard B, the taxpayer would need to add the amount paid in cash for Vineyard B to its carryover basis as shown in Figure 2.
If she sells the shares for $22,000, Pam will owe tax on a $12,000 gain, because of the carryover basis, rather than owing tax on the $3,000 gain since the gift.
In a B reorganization, the acquirer's tax basis in the newly acquired Target stock is the surrendering transferor's basis in the stock (or carryover basis under section 362(b)).
The Service recently released a notice providing guidance with regard to the time and manner in which the executor of an estate of a decedent who died in 2010 may elect to have the estate tax not apply, and to have the carryover basis rules in IRC Section 1022 apply to property transferred as a result of the decedent's death.
(51) With the [section] 338 election, the acquiring corporation takes a cost basis in the target corporation's assets, (52) whereas if no election is made, the acquiring corporation takes a carryover basis. (53) The purpose of [section] 338, in addition to replacing [section] 334(b)(2), was "to replace any nonstatutory treatment of a stock purchase as an asset purchase under the Kimbell-Diamond doctrine." (54)