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Publication 551 - Introductory Material

Table of Contents

What's New

Property acquired from a decedent who died in 2010. Property acquired from a decedent dying in 2010 will no longer have an automatic increase in basis. See Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, for details.

Reminder

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

Introduction

Basis is the amount of your investment in property for tax purposes. Use the basis of property to figure depreciation, amortization, depletion, and casualty losses. Also use it to figure gain or loss on the sale or other disposition of property. You must keep accurate records of all items that affect the basis of property so you can make these computations.

This publication is divided into the following sections.

  • Cost Basis

  • Adjusted Basis

  • Basis Other Than Cost

The basis of property you buy is usually its cost. You may also have to capitalize (add to basis) certain other costs related to buying or producing the property.

Your original basis in property is adjusted (increased or decreased) by certain events. If you make improvements to the property, increase your basis. If you take deductions for depreciation or casualty losses, reduce your basis.

You cannot determine your basis in some assets by cost. This includes property you receive as a gift or inheritance. It also applies to property received in an involuntary conversion and certain other circumstances.

Comments and suggestions.   We welcome your comments about this publication and your suggestions for future editions.

  You can write to us at the following address:

Internal Revenue Service 
Business Forms and Publications Branch 
SE:W:CAR:MP:T:B 
1111 Constitution Ave. NW, IR-6526 
Washington, DC 20224

  We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.

  You can email us at *taxforms@irs.gov. (The asterisk must be included in the address.) Please put “Publications Comment” on the subject line. You can also send us comments from www.irs.gov/formspubs/, select “Comment on Tax Forms and Publications” under “Information about.”

  Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products.

Ordering forms and publications.   Visit www.irs.gov/formspubs to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 business days after your request is received.

 
Internal Revenue Service  
1201 N. Mitsubishi Motorway 
Bloomington, IL 61705-6613

Tax questions.   If you have a tax question, visit www.irs.gov or call 1-800-829-1040. We cannot answer tax questions sent to either of the above addresses.

Useful Items - You may want to see:

Publication

  • 463 Travel, Entertainment, Gift, and Car Expenses

  • 523 Selling Your Home

  • 525 Taxable and Nontaxable Income

  • 527 Residential Rental Property

  • 530 Tax Information for First-Time Homeowners

  • 535 Business Expenses

  • 537 Installment Sales

  • 544 Sales and Other Dispositions of Assets

  • 550 Investment Income and Expenses

  • 559 Survivors, Executors, and Administrators

  • 564 Mutual Fund Distributions

  • 587 Business Use of Your Home

  • 946 How To Depreciate Property

Form (and Instructions)

  • 706 United States Estate (and Generation-Skipping Transfer) Tax Return

  • 706-A United States Additional Estate Tax Return

  • 8594 Asset Acquisition Statement

See How To Get Tax Help near the end of this publication for information about getting publications and forms.

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