What is Adjusted Basis?
Adjusted basis refers to the increase or decrease in an asset's value due to depreciation or capital enhancements.
How Does Adjusted Basis Work?
From the time an asset is acquired until the time it is sold, an asset experiences a number of events which affect its value. These events can cause an increase or decrease in the asset's total value. An asset's adjusted basis takes the base price of an asset and adjusts it for changes in value reflecting enhancements and or depreciation. For instance, a given asset purchased for $100 that is sold one year later after having experienced $10 in depreciation and $50 in improvements would have an adjusted basis of $100 - $10 + $50 = $140.
Why Does Adjusted Basis Matter?
In the event an asset is sold, the adjusted basis is needed for tax purposes as it is used to calculate the capital gain or loss.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
With the major averages dropping like stones and investors seeing a sea of red on their computer screens, you might think there aren't any winning...
Read More →
When bears grab a hold of the market and volatility is the order of the day, most investors either...
Read More →
If you're like the majority of investors, I'll bet you have a negative view of stocks trading on the "...
Read More →
Good habits are the key to financial security. If you want to put yourself in position to weather any financial storm, you need to understand and follow only four good habits: 1. Work hard...
Read More →
When you're faced with serious money sucks -- say, unemployment, a new home or the prospect of funding your child's college education -- it...
Read More →
