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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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.
The carryover basis would also be calculated by exchange group.
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.
The carryover basis means Son's holding period would include Father's 24-month holding period (IRC section 1223[2]).
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)).
Instead, heirs' basis in assets they inherit is determined under the modified carryover basis rules in IRC [section] 1022.
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.
Under the 2010 act, executors of 2010 estates can elect out of the estate tax and back into carryover basis.
As an alternative, estates may elect to be taxed as if the original 2010 rules applied (as if there were no estate tax and the modified carryover basis rules applied).
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) repealed the federal estate tax and replaced it with a carryover basis regime that is effective on the estates of those who die after Dec.