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Basis is a short version of the term ‘Adjusted Tax Basis.’ Basis measures an owner’s investment in an asset. Usually basis decreases each year by the amount of depreciation taken on the asset. When it comes time to sell an asset, basis is just about the only thing that can lower the tax bill. Gains (which are taxable) are figured using basis, so keeping track of the adjusted tax basis of assets is important. This is how basis is used to figure a gain:
Sales Price - Basis = Gain.
Rural Tax Education
sales, gains, basis
Education | Higher Education | University Extension
Kauppila, Dennis, "Basis" (2012). Rural Tax Education. 31.