Basis is very important when determining gain or loss for certain transactions. It is also one of the limiting factors in determining how much loss can be deducted by partnership and S Corp shareholders.
What is basis?
For tax purposes, basis is the amount invested in a property adjusted for certain items.
Basis is usually equal to the cost, or the amount paid in cash, debt obligations, other property or services.
Basis in property is increased by capital items such as capital improvement and assessments for local improvement. Items that constitute a return of capital (e.g. Read more