Carryover and Substituted Basis
Property acquired in a non-taxable exchange takes the basis of the property exchanged. Examples of non-taxable exchanges include like kind exchanges, partnership liquidations, and corporate reorganizations.
Property acquired by distribution from a corporation or partnership may retain the same tax basis to the member as the entity's tax basis in certain circumstances. This basis is increased by any gain the member must recognize on the distribution.
Read more about this topic: Tax Basis
Famous quotes containing the words substituted and/or basis:
“Verily, the Indian has but a feeble hold on his bow now; but the curiosity of the white man is insatiable, and from the first he has been eager to witness this forest accomplishment. That elastic piece of wood with its feathered dart, so sure to be unstrung by contact with civilization, will serve for the type, the coat-of-arms of the savage. Alas for the Hunter Race! the white man has driven off their game, and substituted a cent in its place.”
—Henry David Thoreau (1817–1862)
“The basis of political economy is non-interference. The only safe rule is found in the self-adjusting meter of demand and supply. Do not legislate. Meddle, and you snap the sinews with your sumptuary laws.”
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