Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

File For 2011 Taxes

Tax Amendment Form 20101040 EsEfile For Free State And FederalNeed To File My 2012 TaxesWho Has Free State Tax FilingAmmendFree Amended Tax ReturnForm 1040ez 2012Tax Forms Ez1040x Amended Return 2012Form 1040ez2012 Income Tax FormsCan I Do My State Taxes Online For FreePenalties For Filing Taxes LateOnline 1040 EzAmending 2010 Federal Tax ReturnFile 2010 Taxes Online LateFiling 1040x ElectronicallyHow Can I File My 2012 Taxes For FreeHrblock Free FileCan I File 2012 Taxes OnlineH&r Block 1040x Online10 40 Ez Tax FormWhere Can I Get A 1040x FormFile Tax Extension For 2011 FreeEz 1040 E-fileFile 1040nr OnlineTax Forms For 20102012 Income Tax Forms1042ezWhen Amend Tax ReturnH R Block 2011 TaxesEz 40 Tax Form1040ez Free Online FileTax Planning Us State Income TaxesHow To Fill Out Amended Tax ReturnFile Taxes 20091040nr FilingFiling 2010 Taxes Late OnlineAmend 2012 Taxes

File For 2011 Taxes

File for 2011 taxes 13. File for 2011 taxes   Basis of Property Table of Contents Introduction Useful Items - You may want to see: Cost BasisReal Property Adjusted BasisIncreases to Basis Decreases to Basis Basis Other Than CostProperty Received for Services Taxable Exchanges Involuntary Conversions Nontaxable Exchanges Property Transferred From a Spouse Property Received as a Gift Inherited Property Property Changed From Personal to Business or Rental Use Stocks and Bonds Introduction This chapter discusses how to figure your basis in property. File for 2011 taxes It is divided into the following sections. File for 2011 taxes Cost basis. File for 2011 taxes Adjusted basis. File for 2011 taxes Basis other than cost. File for 2011 taxes Your basis is the amount of your investment in property for tax purposes. File for 2011 taxes Use the basis to figure gain or loss on the sale, exchange, or other disposition of property. File for 2011 taxes Also use it to figure deductions for depreciation, amortization, depletion, and casualty losses. File for 2011 taxes If you use property for both business or investment purposes and for personal purposes, you must allocate the basis based on the use. File for 2011 taxes Only the basis allocated to the business or investment use of the property can be depreciated. File for 2011 taxes Your original basis in property is adjusted (increased or decreased) by certain events. File for 2011 taxes For example, if you make improvements to the property, increase your basis. File for 2011 taxes If you take deductions for depreciation or casualty losses, or claim certain credits, reduce your basis. File for 2011 taxes Keep accurate records of all items that affect the basis of your property. File for 2011 taxes For more information on keeping records, see chapter 1. File for 2011 taxes Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 535 Business Expenses 537 Installment Sales 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 551 Basis of Assets 946 How To Depreciate Property Cost Basis The basis of property you buy is usually its cost. File for 2011 taxes The cost is the amount you pay in cash, debt obligations, other property, or services. File for 2011 taxes Your cost also includes amounts you pay for the following items: Sales tax, Freight, Installation and testing, Excise taxes, Legal and accounting fees (when they must be capitalized), Revenue stamps, Recording fees, and Real estate taxes (if you assume liability for the seller). File for 2011 taxes In addition, the basis of real estate and business assets may include other items. File for 2011 taxes Loans with low or no interest. File for 2011 taxes    If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price minus any amount considered to be unstated interest. File for 2011 taxes You generally have unstated interest if your interest rate is less than the applicable federal rate. File for 2011 taxes   For more information, see Unstated Interest and Original Issue Discount (OID) in Publication 537. File for 2011 taxes Real Property Real property, also called real estate, is land and generally anything built on, growing on, or attached to land. File for 2011 taxes If you buy real property, certain fees and other expenses you pay are part of your cost basis in the property. File for 2011 taxes Lump sum purchase. File for 2011 taxes   If you buy buildings and the land on which they stand for a lump sum, allocate the cost basis among the land and the buildings. File for 2011 taxes Allocate the cost basis according to the respective fair market values (FMVs) of the land and buildings at the time of purchase. File for 2011 taxes Figure the basis of each asset by multiplying the lump sum by a fraction. File for 2011 taxes The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. File for 2011 taxes    If you are not certain of the FMVs of the land and buildings, you can allocate the basis according to their assessed values for real estate tax purposes. File for 2011 taxes Fair market value (FMV). File for 2011 taxes   FMV is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the necessary facts. File for 2011 taxes Sales of similar property on or about the same date may be helpful in figuring the FMV of the property. File for 2011 taxes Assumption of mortgage. File for 2011 taxes   If you buy property and assume (or buy the property subject to) an existing mortgage on the property, your basis includes the amount you pay for the property plus the amount to be paid on the mortgage. File for 2011 taxes Settlement costs. File for 2011 taxes   Your basis includes the settlement fees and closing costs you paid for buying the property. File for 2011 taxes (A fee for buying property is a cost that must be paid even if you buy the property for cash. File for 2011 taxes ) Do not include fees and costs for getting a loan on the property in your basis. File for 2011 taxes   The following are some of the settlement fees or closing costs you can include in the basis of your property. File for 2011 taxes Abstract fees (abstract of title fees). File for 2011 taxes Charges for installing utility services. File for 2011 taxes Legal fees (including fees for the title search and preparation of the sales contract and deed). File for 2011 taxes Recording fees. File for 2011 taxes Survey fees. File for 2011 taxes Transfer taxes. File for 2011 taxes Owner's title insurance. File for 2011 taxes Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. File for 2011 taxes   Settlement costs do not include amounts placed in escrow for the future payment of items such as taxes and insurance. File for 2011 taxes   The following are some of the settlement fees and closing costs you cannot include in the basis of property. File for 2011 taxes Casualty insurance premiums. File for 2011 taxes Rent for occupancy of the property before closing. File for 2011 taxes Charges for utilities or other services related to occupancy of the property before closing. File for 2011 taxes Charges connected with getting a loan, such as points (discount points, loan origination fees), mortgage insurance premiums, loan assumption fees, cost of a credit report, and fees for an appraisal required by a lender. File for 2011 taxes Fees for refinancing a mortgage. File for 2011 taxes Real estate taxes. File for 2011 taxes   If you pay real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. File for 2011 taxes You cannot deduct them as an expense. File for 2011 taxes    If you reimburse the seller for taxes the seller paid for you, you can usually deduct that amount as an expense in the year of purchase. File for 2011 taxes Do not include that amount in the basis of your property. File for 2011 taxes If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. File for 2011 taxes Points. File for 2011 taxes   If you pay points to get a loan (including a mortgage, second mortgage, line of credit, or a home equity loan), do not add the points to the basis of the related property. File for 2011 taxes Generally, you deduct the points over the term of the loan. File for 2011 taxes For more information on how to deduct points, see chapter 23. File for 2011 taxes Points on home mortgage. File for 2011 taxes   Special rules may apply to points you and the seller pay when you get a mortgage to buy your main home. File for 2011 taxes If certain requirements are met, you can deduct the points in full for the year in which they are paid. File for 2011 taxes Reduce the basis of your home by any seller-paid points. File for 2011 taxes Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments (increases and decreases) to the cost basis or basis other than cost (discussed later) of the property. File for 2011 taxes The result is the adjusted basis. File for 2011 taxes Increases to Basis Increase the basis of any property by all items properly added to a capital account. File for 2011 taxes Examples of items that increase basis are shown in Table 13-1. File for 2011 taxes These include the items discussed below. File for 2011 taxes Improvements. File for 2011 taxes   Add to your basis in property the cost of improvements having a useful life of more than 1 year, that increase the value of the property, lengthen its life, or adapt it to a different use. File for 2011 taxes For example, improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new plumbing or wiring, installing a new roof, or paving your driveway. File for 2011 taxes Assessments for local improvements. File for 2011 taxes   Add to the basis of property assessments for improvements such as streets and sidewalks if they increase the value of the property assessed. File for 2011 taxes Do not deduct them as taxes. File for 2011 taxes However, you can deduct as taxes assessments for maintenance or repairs, or for meeting interest charges related to the improvements. File for 2011 taxes Example. File for 2011 taxes Your city changes the street in front of your store into an enclosed pedestrian mall and assesses you and other affected property owners for the cost of the conversion. File for 2011 taxes Add the assessment to your property's basis. File for 2011 taxes In this example, the assessment is a depreciable asset. File for 2011 taxes Decreases to Basis Decrease the basis of any property by all items that represent a return of capital for the period during which you held the property. File for 2011 taxes Examples of items that decrease basis are shown in Table 13-1. File for 2011 taxes These include the items discussed below. File for 2011 taxes Table 13-1. File for 2011 taxes Examples of Adjustments to Basis Increases to Basis Decreases to Basis • Capital improvements: • Exclusion from income of   Putting an addition on your home subsidies for energy conservation   Replacing an entire roof measures   Paving your driveway     Installing central air conditioning • Casualty or theft loss deductions   Rewiring your home and insurance reimbursements       • Assessments for local improvements:     Water connections     Extending utility service lines to the property • Postponed gain from the sale of a home   Sidewalks • Alternative motor vehicle credit  (Form 8910)   Roads       • Alternative fuel vehicle refueling     property credit (Form 8911)           • Residential energy credits (Form 5695)       • Casualty losses: • Depreciation and section 179 deduction   Restoring damaged property     • Nontaxable corporate distributions • Legal fees:     Cost of defending and perfecting a title • Certain canceled debt excluded from   Fees for getting a reduction of an assessment income     • Zoning costs • Easements           • Adoption tax benefits Casualty and theft losses. File for 2011 taxes   If you have a casualty or theft loss, decrease the basis in your property by any insurance proceeds or other reimbursement and by any deductible loss not covered by insurance. File for 2011 taxes    You must increase your basis in the property by the amount you spend on repairs that restore the property to its pre-casualty condition. File for 2011 taxes   For more information on casualty and theft losses, see chapter 25. File for 2011 taxes Depreciation and section 179 deduction. File for 2011 taxes   Decrease the basis of your qualifying business property by any section 179 deduction you take and the depreciation you deducted, or could have deducted (including any special depreciation allowance), on your tax returns under the method of depreciation you selected. File for 2011 taxes   For more information about depreciation and the section 179 deduction, see Publication 946 and the Instructions for Form 4562. File for 2011 taxes Example. File for 2011 taxes You owned a duplex used as rental property that cost you $40,000, of which $35,000 was allocated to the building and $5,000 to the land. File for 2011 taxes You added an improvement to the duplex that cost $10,000. File for 2011 taxes In February last year, the duplex was damaged by fire. File for 2011 taxes Up to that time, you had been allowed depreciation of $23,000. File for 2011 taxes You sold some salvaged material for $1,300 and collected $19,700 from your insurance company. File for 2011 taxes You deducted a casualty loss of $1,000 on your income tax return for last year. File for 2011 taxes You spent $19,000 of the insurance proceeds for restoration of the duplex, which was completed this year. File for 2011 taxes You must use the duplex's adjusted basis after the restoration to determine depreciation for the rest of the property's recovery period. File for 2011 taxes Figure the adjusted basis of the duplex as follows: Original cost of duplex $35,000 Addition to duplex 10,000 Total cost of duplex $45,000 Minus: Depreciation 23,000 Adjusted basis before casualty $22,000 Minus: Insurance proceeds $19,700     Deducted casualty loss 1,000     Salvage proceeds 1,300 22,000 Adjusted basis after casualty $-0- Add: Cost of restoring duplex 19,000 Adjusted basis after restoration $19,000 Note. File for 2011 taxes Your basis in the land is its original cost of $5,000. File for 2011 taxes Easements. File for 2011 taxes   The amount you receive for granting an easement is generally considered to be proceeds from the sale of an interest in real property. File for 2011 taxes It reduces the basis of the affected part of the property. File for 2011 taxes If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. File for 2011 taxes   If the gain is on a capital asset, see chapter 16 for information about how to report it. File for 2011 taxes If the gain is on property used in a trade or business, see Publication 544 for information about how to report it. File for 2011 taxes Exclusion of subsidies for energy conservation measures. File for 2011 taxes   You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of an energy conservation measure for a dwelling unit. File for 2011 taxes Reduce the basis of the property for which you received the subsidy by the excluded amount. File for 2011 taxes For more information about this subsidy, see chapter 12. File for 2011 taxes Postponed gain from sale of home. File for 2011 taxes    If you postponed gain from the sale of your main home under rules in effect before May 7, 1997, you must reduce the basis of the home you acquired as a replacement by the amount of the postponed gain. File for 2011 taxes For more information on the rules for the sale of a home, see chapter 15. File for 2011 taxes Basis Other Than Cost There are many times when you cannot use cost as basis. File for 2011 taxes In these cases, the fair market value or the adjusted basis of the property can be used. File for 2011 taxes Fair market value (FMV) and adjusted basis were discussed earlier. File for 2011 taxes Property Received for Services If you receive property for your services, include the FMV of the property in income. File for 2011 taxes The amount you include in income becomes your basis. File for 2011 taxes If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. File for 2011 taxes Restricted property. File for 2011 taxes   If you receive property for your services and the property is subject to certain restrictions, your basis in the property is its FMV when it becomes substantially vested. File for 2011 taxes However, this rule does not apply if you make an election to include in income the FMV of the property at the time it is transferred to you, less any amount you paid for it. File for 2011 taxes Property is substantially vested when it is transferable or when it is not subject to a substantial risk of forfeiture (you do not have a good chance of losing it). File for 2011 taxes For more information, see Restricted Property in Publication 525. File for 2011 taxes Bargain purchases. File for 2011 taxes   A bargain purchase is a purchase of an item for less than its FMV. File for 2011 taxes If, as compensation for services, you buy goods or other property at less than FMV, include the difference between the purchase price and the property's FMV in your income. File for 2011 taxes Your basis in the property is its FMV (your purchase price plus the amount you include in income). File for 2011 taxes   If the difference between your purchase price and the FMV is a qualified employee discount, do not include the difference in income. File for 2011 taxes However, your basis in the property is still its FMV. File for 2011 taxes See Employee Discounts in Publication 15-B. File for 2011 taxes Taxable Exchanges A taxable exchange is one in which the gain is taxable or the loss is deductible. File for 2011 taxes A taxable gain or deductible loss also is known as a recognized gain or loss. File for 2011 taxes If you receive property in exchange for other property in a taxable exchange, the basis of the property you receive is usually its FMV at the time of the exchange. File for 2011 taxes Involuntary Conversions If you receive replacement property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, figure the basis of the replacement property using the basis of the converted property. File for 2011 taxes Similar or related property. File for 2011 taxes   If you receive replacement property similar or related in service or use to the converted property, the replacement property's basis is the same as the converted property's basis on the date of the conversion, with the following adjustments. File for 2011 taxes Decrease the basis by the following. File for 2011 taxes Any loss you recognize on the involuntary conversion. File for 2011 taxes Any money you receive that you do not spend on similar property. File for 2011 taxes Increase the basis by the following. File for 2011 taxes Any gain you recognize on the involuntary conversion. File for 2011 taxes Any cost of acquiring the replacement property. File for 2011 taxes Money or property not similar or related. File for 2011 taxes    If you receive money or property not similar or related in service or use to the converted property, and you buy replacement property similar or related in service or use to the converted property, the basis of the replacement property is its cost decreased by the gain not recognized on the conversion. File for 2011 taxes Example. File for 2011 taxes The state condemned your property. File for 2011 taxes The adjusted basis of the property was $26,000 and the state paid you $31,000 for it. File for 2011 taxes You realized a gain of $5,000 ($31,000 − $26,000). File for 2011 taxes You bought replacement property similar in use to the converted property for $29,000. File for 2011 taxes You recognize a gain of $2,000 ($31,000 − $29,000), the unspent part of the payment from the state. File for 2011 taxes Your unrecognized gain is $3,000, the difference between the $5,000 realized gain and the $2,000 recognized gain. File for 2011 taxes The basis of the replacement property is figured as follows: Cost of replacement property $29,000 Minus: Gain not recognized 3,000 Basis of replacement property $26,000 Allocating the basis. File for 2011 taxes   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. File for 2011 taxes Basis for depreciation. File for 2011 taxes   Special rules apply in determining and depreciating the basis of MACRS property acquired in an involuntary conversion. File for 2011 taxes For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. File for 2011 taxes Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. File for 2011 taxes If you receive property in a nontaxable exchange, its basis is generally the same as the basis of the property you transferred. File for 2011 taxes See Nontaxable Trades in chapter 14. File for 2011 taxes Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. File for 2011 taxes To qualify as a like-kind exchange, the property traded and the property received must be both of the following. File for 2011 taxes Qualifying property. File for 2011 taxes Like-kind property. File for 2011 taxes The basis of the property you receive is generally the same as the adjusted basis of the property you gave up. File for 2011 taxes If you trade property in a like-kind exchange and also pay money, the basis of the property received is the adjusted basis of the property you gave up increased by the money you paid. File for 2011 taxes Qualifying property. File for 2011 taxes   In a like-kind exchange, you must hold for investment or for productive use in your trade or business both the property you give up and the property you receive. File for 2011 taxes Like-kind property. File for 2011 taxes   There must be an exchange of like-kind property. File for 2011 taxes Like-kind properties are properties of the same nature or character, even if they differ in grade or quality. File for 2011 taxes The exchange of real estate for real estate and personal property for similar personal property are exchanges of like-kind property. File for 2011 taxes Example. File for 2011 taxes You trade in an old truck used in your business with an adjusted basis of $1,700 for a new one costing $6,800. File for 2011 taxes The dealer allows you $2,000 on the old truck, and you pay $4,800. File for 2011 taxes This is a like-kind exchange. File for 2011 taxes The basis of the new truck is $6,500 (the adjusted basis of the old one, $1,700, plus the amount you paid, $4,800). File for 2011 taxes If you sell your old truck to a third party for $2,000 instead of trading it in and then buy a new one from the dealer, you have a taxable gain of $300 on the sale (the $2,000 sale price minus the $1,700 adjusted basis). File for 2011 taxes The basis of the new truck is the price you pay the dealer. File for 2011 taxes Partially nontaxable exchanges. File for 2011 taxes   A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like-kind property. File for 2011 taxes The basis of the property you receive is the same as the adjusted basis of the property you gave up, with the following adjustments. File for 2011 taxes Decrease the basis by the following amounts. File for 2011 taxes Any money you receive. File for 2011 taxes Any loss you recognize on the exchange. File for 2011 taxes Increase the basis by the following amounts. File for 2011 taxes Any additional costs you incur. File for 2011 taxes Any gain you recognize on the exchange. File for 2011 taxes If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. File for 2011 taxes Allocation of basis. File for 2011 taxes   If you receive like-kind and unlike properties in the exchange, allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. File for 2011 taxes The rest is the basis of the like-kind property. File for 2011 taxes More information. File for 2011 taxes   See Like-Kind Exchanges in chapter 1 of Publication 544 for more information. File for 2011 taxes Basis for depreciation. File for 2011 taxes   Special rules apply in determining and depreciating the basis of MACRS property acquired in a like-kind exchange. File for 2011 taxes For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. File for 2011 taxes Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse is the same as your spouse's adjusted basis. File for 2011 taxes The same rule applies to a transfer by your former spouse that is incident to divorce. File for 2011 taxes However, for property transferred in trust, adjust your basis for any gain recognized by your spouse or former spouse if the liabilities assumed, plus the liabilities to which the property is subject, are more than the adjusted basis of the property transferred. File for 2011 taxes If the property transferred to you is a series E, series EE, or series I U. File for 2011 taxes S. File for 2011 taxes savings bond, the transferor must include in income the interest accrued to the date of transfer. File for 2011 taxes Your basis in the bond immediately after the transfer is equal to the transferor's basis increased by the interest income includible in the transferor's income. File for 2011 taxes For more information on these bonds, see chapter 7. File for 2011 taxes At the time of the transfer, the transferor must give you the records needed to determine the adjusted basis and holding period of the property as of the date of the transfer. File for 2011 taxes For more information about the transfer of property from a spouse, see chapter 14. File for 2011 taxes Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis to the donor just before it was given to you, its FMV at the time it was given to you, and any gift tax paid on it. File for 2011 taxes FMV less than donor's adjusted basis. File for 2011 taxes   If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. File for 2011 taxes Your basis for figuring gain is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you held the property. File for 2011 taxes Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustments to basis while you held the property. File for 2011 taxes See Adjusted Basis , earlier. File for 2011 taxes Example. File for 2011 taxes You received an acre of land as a gift. File for 2011 taxes At the time of the gift, the land had an FMV of $8,000. File for 2011 taxes The donor's adjusted basis was $10,000. File for 2011 taxes After you received the property, no events occurred to increase or decrease your basis. File for 2011 taxes If you later sell the property for $12,000, you will have a $2,000 gain because you must use the donor's adjusted basis at the time of the gift ($10,000) as your basis to figure gain. File for 2011 taxes If you sell the property for $7,000, you will have a $1,000 loss because you must use the FMV at the time of the gift ($8,000) as your basis to figure loss. File for 2011 taxes If the sales price is between $8,000 and $10,000, you have neither gain nor loss. File for 2011 taxes Business property. File for 2011 taxes   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deductions is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. File for 2011 taxes FMV equal to or greater than donor's adjusted basis. File for 2011 taxes   If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis at the time you received the gift. File for 2011 taxes Increase your basis by all or part of any gift tax paid, depending on the date of the gift, explained later. File for 2011 taxes   Also, for figuring gain or loss from a sale or other disposition or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis (the donor's adjusted basis) by any required adjustments to basis while you held the property. File for 2011 taxes See Adjusted Basis , earlier. File for 2011 taxes   If you received a gift during the tax year, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it due to the net increase in value of the gift. File for 2011 taxes Figure the increase by multiplying the gift tax paid by a fraction. File for 2011 taxes The numerator of the fraction is the net increase in value of the gift and the denominator is the amount of the gift. File for 2011 taxes   The net increase in value of the gift is the FMV of the gift minus the donor's adjusted basis. File for 2011 taxes The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. File for 2011 taxes Example. File for 2011 taxes In 2013, you received a gift of property from your mother that had an FMV of $50,000. File for 2011 taxes Her adjusted basis was $20,000. File for 2011 taxes The amount of the gift for gift tax purposes was $36,000 ($50,000 minus the $14,000 annual exclusion). File for 2011 taxes She paid a gift tax of $7,320 on the property. File for 2011 taxes Your basis is $26,076, figured as follows: Fair market value $50,000 Minus: Adjusted basis −20,000 Net increase in value $30,000     Gift tax paid $7,320 Multiplied by ($30,000 ÷ $36,000) × . File for 2011 taxes 83 Gift tax due to net increase in value $6,076 Adjusted basis of property to your mother +20,000 Your basis in the property $26,076 Note. File for 2011 taxes If you received a gift before 1977, your basis in the gift (the donor's adjusted basis) includes any gift tax paid on it. File for 2011 taxes However, your basis cannot exceed the FMV of the gift at the time it was given to you. File for 2011 taxes Inherited Property Your basis in property you inherited from a decedent, who died before January 1, 2010, or after December 31, 2010, is generally one of the following: The FMV of the property at the date of the decedent's death. File for 2011 taxes The FMV on the alternate valuation date if the personal representative for the estate elects to use alternate valuation. File for 2011 taxes The value under the special-use valuation method for real property used in farming or a closely held business if elected for estate tax purposes. File for 2011 taxes The decedent's adjusted basis in land to the extent of the value excluded from the decedent's taxable estate as a qualified conservation easement. File for 2011 taxes If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. File for 2011 taxes For more information, see the instructions to Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. File for 2011 taxes Property inherited from a decedent who died in 2010. File for 2011 taxes   If you inherited property from a decedent who died in 2010, special rules may apply. File for 2011 taxes For more information, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. File for 2011 taxes Community property. File for 2011 taxes   In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), husband and wife are each usually considered to own half the community property. File for 2011 taxes When either spouse dies, the total value of the community property, even the part belonging to the surviving spouse, generally becomes the basis of the entire property. File for 2011 taxes For this rule to apply, at least half the value of the community property interest must be includible in the decedent's gross estate, whether or not the estate must file a return. File for 2011 taxes Example. File for 2011 taxes You and your spouse owned community property that had a basis of $80,000. File for 2011 taxes When your spouse died, half the FMV of the community interest was includible in your spouse's estate. File for 2011 taxes The FMV of the community interest was $100,000. File for 2011 taxes The basis of your half of the property after the death of your spouse is $50,000 (half of the $100,000 FMV). File for 2011 taxes The basis of the other half to your spouse's heirs is also $50,000. File for 2011 taxes For more information about community property, see Publication 555, Community Property. File for 2011 taxes Property Changed From Personal to Business or Rental Use If you hold property for personal use and then change it to business use or use it to produce rent, you can begin to depreciate the property at the time of the change. File for 2011 taxes To do so, you must figure its basis for depreciation at the time of the change. File for 2011 taxes An example of changing property held for personal use to business or rental use would be renting out your former personal residence. File for 2011 taxes Basis for depreciation. File for 2011 taxes   The basis for depreciation is the lesser of the following amounts. File for 2011 taxes The FMV of the property on the date of the change. File for 2011 taxes Your adjusted basis on the date of the change. File for 2011 taxes Example. File for 2011 taxes Several years ago, you paid $160,000 to have your house built on a lot that cost $25,000. File for 2011 taxes You paid $20,000 for permanent improvements to the house and claimed a $2,000 casualty loss deduction for damage to the house before changing the property to rental use last year. File for 2011 taxes Because land is not depreciable, you include only the cost of the house when figuring the basis for depreciation. File for 2011 taxes Your adjusted basis in the house when you changed its use was $178,000 ($160,000 + $20,000 − $2,000). File for 2011 taxes On the same date, your property had an FMV of $180,000, of which $15,000 was for the land and $165,000 was for the house. File for 2011 taxes The basis for figuring depreciation on the house is its FMV on the date of the change ($165,000) because it is less than your adjusted basis ($178,000). File for 2011 taxes Sale of property. File for 2011 taxes   If you later sell or dispose of property changed to business or rental use, the basis you use will depend on whether you are figuring gain or loss. File for 2011 taxes Gain. File for 2011 taxes   The basis for figuring a gain is your adjusted basis in the property when you sell the property. File for 2011 taxes Example. File for 2011 taxes Assume the same facts as in the previous example except that you sell the property at a gain after being allowed depreciation deductions of $37,500. File for 2011 taxes Your adjusted basis for figuring gain is $165,500 ($178,000 + $25,000 (land) − $37,500). File for 2011 taxes Loss. File for 2011 taxes   Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. File for 2011 taxes Then make adjustments (increases and decreases) for the period after the change in the property's use, as discussed earlier under Adjusted Basis . File for 2011 taxes Example. File for 2011 taxes Assume the same facts as in the previous example, except that you sell the property at a loss after being allowed depreciation deductions of $37,500. File for 2011 taxes In this case, you would start with the FMV on the date of the change to rental use ($180,000), because it is less than the adjusted basis of $203,000 ($178,000 + $25,000 (land)) on that date. File for 2011 taxes Reduce that amount ($180,000) by the depreciation deductions ($37,500). File for 2011 taxes The basis for loss is $142,500 ($180,000 − $37,500). File for 2011 taxes Stocks and Bonds The basis of stocks or bonds you buy generally is the purchase price plus any costs of purchase, such as commissions and recording or transfer fees. File for 2011 taxes If you get stocks or bonds other than by purchase, your basis is usually determined by the FMV or the previous owner's adjusted basis, as discussed earlier. File for 2011 taxes You must adjust the basis of stocks for certain events that occur after purchase. File for 2011 taxes For example, if you receive additional stock from nontaxable stock dividends or stock splits, reduce your basis for each share of stock by dividing the adjusted basis of the old stock by the number of shares of old and new stock. File for 2011 taxes This rule applies only when the additional stock received is identical to the stock held. File for 2011 taxes Also reduce your basis when you receive nontaxable distributions. File for 2011 taxes They are a return of capital. File for 2011 taxes Example. File for 2011 taxes In 2011 you bought 100 shares of XYZ stock for $1,000 or $10 a share. File for 2011 taxes In 2012 you bought 100 shares of XYZ stock for $1,600 or $16 a share. File for 2011 taxes In 2013 XYZ declared a 2-for-1 stock split. File for 2011 taxes You now have 200 shares of stock with a basis of $5 a share and 200 shares with a basis of $8 a share. File for 2011 taxes Other basis. File for 2011 taxes   There are other ways to figure the basis of stocks or bonds depending on how you acquired them. File for 2011 taxes For detailed information, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. File for 2011 taxes Identifying stocks or bonds sold. File for 2011 taxes   If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stocks or bonds. File for 2011 taxes If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. File for 2011 taxes For more information about identifying securities you sell, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. File for 2011 taxes Mutual fund shares. File for 2011 taxes   If you sell mutual fund shares you acquired at various times and prices and left on deposit in an account kept by a custodian or agent, you can elect to use an average basis. File for 2011 taxes For more information, see Publication 550. File for 2011 taxes Bond premium. File for 2011 taxes   If you buy a taxable bond at a premium and elect to amortize the premium, reduce the basis of the bond by the amortized premium you deduct each year. File for 2011 taxes See Bond Premium Amortization in chapter 3 of Publication 550 for more information. File for 2011 taxes Although you cannot deduct the premium on a tax-exempt bond, you must amortize the premium each year and reduce your basis in the bond by the amortized amount. File for 2011 taxes Original issue discount (OID) on debt instruments. File for 2011 taxes   You must increase your basis in an OID debt instrument by the OID you include in income for that instrument. File for 2011 taxes See Original Issue Discount (OID) in chapter 7 and Publication 1212, Guide To Original Issue Discount (OID) Instruments. File for 2011 taxes Tax-exempt obligations. File for 2011 taxes    OID on tax-exempt obligations is generally not taxable. File for 2011 taxes However, when you dispose of a tax-exempt obligation issued after September 3, 1982, and acquired after March 1, 1984, you must accrue OID on the obligation to determine its adjusted basis. File for 2011 taxes The accrued OID is added to the basis of the obligation to determine your gain or loss. File for 2011 taxes See chapter 4 of Publication 550. File for 2011 taxes Prev  Up  Next   Home   More Online Publications
Español

Health by Population Group

Find health-related information for children, seniors, veterans, and other specific populations.

The File For 2011 Taxes

File for 2011 taxes Index A Abandonments, Abandonments Annuities, Insurance Policies and Annuities Asset classification Capital, Capital Assets Noncapital, Noncapital Assets Assistance (see Tax help) Assumption of liabilities, Assumption of liabilities. File for 2011 taxes , Liabilities. File for 2011 taxes B Basis Adjusted, Adjusted basis. File for 2011 taxes Original, Basis. File for 2011 taxes Bonds, U. File for 2011 taxes S. File for 2011 taxes Treasury, U. File for 2011 taxes S. File for 2011 taxes Treasury Notes or Bonds Business, sold, Sale of a Business C Canceled Debt, Cancellation of debt. File for 2011 taxes Lease, Cancellation of a lease. File for 2011 taxes Real property sale, Canceling a sale of real property. File for 2011 taxes Capital assets defined, Capital Assets Capital gains and losses Figuring, Long and Short Term Holding period, Holding period. File for 2011 taxes Long term, Long and Short Term Short term, Long and Short Term Treatment of capital losses, Treatment of Capital Losses Casualties, Section 1231 transactions. File for 2011 taxes Charitable organization Bargain sale to, Bargain sales to charity. File for 2011 taxes , Bargain sale to charity. File for 2011 taxes Gift to, Gift to charitable organization. File for 2011 taxes Classes of assets, Classes of assets. File for 2011 taxes Coal, Coal and Iron Ore Coins, Precious Metals and Stones, Stamps, and Coins Comments, Comments and suggestions. File for 2011 taxes Commodities derivative financial instruments, Commodities derivative financial instrument. File for 2011 taxes Condemnations, Condemnations, Section 1231 transactions. File for 2011 taxes Conversion transactions, Conversion Transactions Copyrights, Copyright. File for 2011 taxes , Copyrights. File for 2011 taxes Covenant not to compete, Covenant not to compete. File for 2011 taxes D Debt cancellation, Cancellation of debt. File for 2011 taxes , Cancellation of debt. File for 2011 taxes Deferred exchange, Deferred Exchange Depreciable property Real, Depreciable real property. File for 2011 taxes Records, Depreciation Recapture Section 1245, Section 1245 property defined. File for 2011 taxes , Like-Kind Exchanges and Involuntary Conversions Section 1250, Section 1250 property defined. File for 2011 taxes Depreciation recapture Personal property, Section 1245 Property Real property, Section 1250 property defined. File for 2011 taxes E Easement, Easement. File for 2011 taxes Exchanges Deferred, Deferred Exchange Involuntary, Involuntary Conversions Like-kind, Like-Kind Exchanges, Like-Kind Exchanges and Involuntary Conversions Nontaxable, Nontaxable Exchanges Related persons, Related persons. File for 2011 taxes U. File for 2011 taxes S. File for 2011 taxes Treasury notes or bonds, U. File for 2011 taxes S. File for 2011 taxes Treasury Notes or Bonds F Fair market value, Fair market value. File for 2011 taxes Foreclosure, Foreclosures and Repossessions Form 1040 (Sch. File for 2011 taxes D), Schedule D and Form 8949 1099-A, Forms 1099-A and 1099-C. File for 2011 taxes , Forms 1099-A and 1099-C. File for 2011 taxes 1099-B, Form 1099-B. File for 2011 taxes 1099-C, Forms 1099-A and 1099-C. File for 2011 taxes , Forms 1099-A and 1099-C. File for 2011 taxes 1099-S, Form 1099-S. File for 2011 taxes 4797, Business property. File for 2011 taxes , Reporting the exchange. File for 2011 taxes , Form 4797 8594, Reporting requirement. File for 2011 taxes 8824, Reporting the exchange. File for 2011 taxes 8949, Forms to file. File for 2011 taxes , Personal-use property. File for 2011 taxes , Reporting the exchange. File for 2011 taxes , More information. File for 2011 taxes , Timber, Introduction, Form 1099-B. File for 2011 taxes , Personal-use property. File for 2011 taxes , Mark-to-market election. File for 2011 taxes Franchise, Franchise, Trademark, or Trade Name Free tax services, Free help with your tax return. File for 2011 taxes G Gains and losses Bargain sale, Bargain Sale Business property, Ordinary or Capital Gain or Loss for Business Property Defined, Gain or Loss From Sales and Exchanges Form 4797, Form 4797 Ordinary or capital, Ordinary or Capital Gain or Loss Property changed to business or rental use, Property Changed to Business or Rental Use Property used partly for rental, Property Used Partly for Business or Rental Reporting, Reporting Gains and Losses Gifts of property, Gifts, Gift. File for 2011 taxes Gold, Precious Metals and Stones, Stamps, and Coins H Hedging transactions, Hedging transaction. File for 2011 taxes Help (see Tax help) Holding period, Holding period. File for 2011 taxes Housing, low income, Low-income housing. File for 2011 taxes , Low-Income Housing With Two or More Elements I Indirect ownership of stock, Ownership of stock or partnership interests. File for 2011 taxes Information returns, Information Returns Inherited property, Inherited property. File for 2011 taxes Installment sales, Installment Sales, Installment sale. File for 2011 taxes Insurance policies, Insurance Policies and Annuities Intangible property, Dispositions of Intangible Property Involuntary conversion Defined, Involuntary Conversions Depreciable property, Like-Kind Exchanges and Involuntary Conversions Iron ore, Coal and Iron Ore L Land Release of restriction, Release of restriction on land. File for 2011 taxes Subdivision, Subdivision of Land Lease, cancellation of, Cancellation of a lease. File for 2011 taxes Liabilities, assumption, Liabilities. File for 2011 taxes Like-kind exchanges Deferred, Deferred Exchange Liabilities, assumed, Assumption of liabilities. File for 2011 taxes Like-class property, Like-Kind Property Like-kind property, Like-Kind Property Multiple parties, Multiple-party transactions. File for 2011 taxes Multiple property, Multiple Property Exchanges Partnership interests, Partnership Interests Qualifying property, Qualifying Property Related persons, Like-Kind Exchanges Between Related Persons Low-income housing, Low-income housing. File for 2011 taxes M Multiple property exchanges, Multiple Property Exchanges N Noncapital assets defined, Noncapital Assets Nontaxable exchanges Like-kind, Like-Kind Exchanges Other nontaxable exchanges, Other Nontaxable Exchanges Partially, Partially Nontaxable Exchanges Property exchanged for stock, Property Exchanged for Stock Notes, U. File for 2011 taxes S. File for 2011 taxes Treasury, U. File for 2011 taxes S. File for 2011 taxes Treasury Notes or Bonds O Ordinary or capital gain, Ordinary or Capital Gain or Loss P Partially nontaxable exchanges, Partially Nontaxable Exchanges Partnership Controlled, Controlled partnership transaction. File for 2011 taxes Related persons, Related persons. File for 2011 taxes , Controlled entity. File for 2011 taxes Sale or exchange of interest, Partnership Interests, Partnership interests. File for 2011 taxes , Partnership interests. File for 2011 taxes Patents, Patents Personal property Depreciable, Like-Kind Exchanges and Involuntary Conversions Gains and losses, Personal-use property. File for 2011 taxes Transfer at death, Transfers at Death Precious metals and stones, Precious Metals and Stones, Stamps, and Coins Property used partly for business or rental, Property Used Partly for Business or Rental, Part business or rental. File for 2011 taxes Publications (see Tax help) Publicly traded securities, rollover of gain from, Rollover of Gain From Publicly Traded Securities R Real property Depreciable, Depreciable real property. File for 2011 taxes Transfer at death, Transfers at Death Related persons, Sales and Exchanges Between Related Persons Condemned property replacement, bought from, Buying replacement property from a related person. File for 2011 taxes Gain on sale of property, Sales and Exchanges Between Related Persons Like-kind exchanges between, Like-Kind Exchanges Between Related Persons List, Related persons. File for 2011 taxes Loss on sale of property, Nondeductible Loss Patent transferred to, Related persons. File for 2011 taxes Replacement property, Replacement property. File for 2011 taxes , Replacement property to be produced. File for 2011 taxes Repossession, Foreclosures and Repossessions, Repossession. File for 2011 taxes Residual method, sale of business, Residual method. File for 2011 taxes Rollover of gain, Rollover of Gain From Publicly Traded Securities S Sale of a business, Sale of a Business Sales Bargain, charitable organization, Bargain sales to charity. File for 2011 taxes , Bargain sale to charity. File for 2011 taxes Installment, Installment Sales, Installment sale. File for 2011 taxes Property changed to business or rental use, Property Changed to Business or Rental Use Related persons, Sales and Exchanges Between Related Persons, Related persons. File for 2011 taxes Section 1231 gains and losses, Section 1231 Gains and Losses Section 1245 property Defined, Section 1245 Property Gain, ordinary income, Gain Treated as Ordinary Income Multiple asset accounts, Multiple asset accounts. File for 2011 taxes Section 1250 property Additional depreciation, Additional Depreciation Defined, Section 1250 property defined. File for 2011 taxes Foreclosure, Foreclosure. File for 2011 taxes Gain, ordinary income, Gain Treated as Ordinary Income Nonresidential, Nonresidential real property. File for 2011 taxes Residential, Residential rental property. File for 2011 taxes Section 197 intangibles, Section 197 Intangibles Severance damages, Severance damages. File for 2011 taxes Silver, Precious Metals and Stones, Stamps, and Coins Small business stock, Gains on Sales of Qualified Small Business Stock Specialized small business investment company (SSBIC), rollover of gain into, Rollover of Gain From Publicly Traded Securities Stamps, Precious Metals and Stones, Stamps, and Coins Stock Capital asset, Capital Assets Controlling interest, corporation, Controlling interest in a corporation. File for 2011 taxes Indirect ownership, Ownership of stock or partnership interests. File for 2011 taxes Property exchanged for, Property Exchanged for Stock Publicly traded securities, Rollover of Gain From Publicly Traded Securities Small business, Gains on Sales of Qualified Small Business Stock Suggestions, Comments and suggestions. File for 2011 taxes T Tax help, How To Get Tax Help Tax rates, capital gain, Capital Gains Tax Rates Thefts, Section 1231 transactions. File for 2011 taxes Timber, Timber, Section 1231 transactions. File for 2011 taxes Trade name, Franchise, Trademark, or Trade Name Trademark, Franchise, Trademark, or Trade Name Transfers to spouse, Transfers to Spouse U U. File for 2011 taxes S. File for 2011 taxes Treasury bonds, U. File for 2011 taxes S. File for 2011 taxes Treasury Notes or Bonds Unharvested crops, Section 1231 transactions. File for 2011 taxes Prev  Up     Home   More Online Publications