[Anonymous]

When calculating a shareholder’s realized gain as well as tax basis when you contribute property into a Corporation….Becker uses “Basis of Property” to calculate gain (if any), but when calculating the tax basis you need to use the “Net Book Value.”

Am I wrong to assume that Basis of Property = NBV??

From the questions/simulations in Becker they are all the same, but depreciation was never mentioned in any of these questions – leaving me to believe that “Basis of Property” may imply initial “cost” of the property.

Thanks in advance!

[sharp315]

“Basis” is the original contribution amount. So if contributing property that cost 50k with 30k depreciation, the basis is 20k (= NBV). The basis then becomes the “adjusted basis” as the NBV changes. So if the asset accumulates another 5k in depreciation, “adjusted basis” is now 15k, which still equals NBV.

For the CPA, basis = adjusted basis = NBV.

BEC: PASS
AUD: PASS
FAR: PASS
REG: PASS

[Anonymous]

Makes sense, thank you!

[Author]

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