Adjusted Basis

Basis is often increased or decreased for various tax-related items. The result of these adjustments to the basis is the adjusted basis. Generally, basis is increased by allowable capital expenditures (such as the cost of improvements) and decreased by certain deductions (such as for depreciation, depletion or amortization) and other tax-related items. A taxpayer needs to know its basis (or adjusted basis if applicable) to figure any gain or loss on the sale or other disposition of the property or any allowable depreciation, depletion, or amortization deductions.

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