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
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