This lesson covers the following topics:
Click the Start course button in the top right to begin. On the next page, you'll find a list of each module in this lesson. You can review the contents of any module by clicking the corresponding Start button. It is recommended that you review the modules in the order presented.
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An asset is a useful or valuable item. Property refers to possessions (assets), tangible or intangible, to which an owner holds legal title.
The basis of property is what it costs to take ownership of an asset. Because there are different ways to take ownership of property, there are different ways to compute basis. This lesson concerns computing the basis of assets purchased or constructed.
Basis is the starting point for computing depreciation, depletion, or amortization on property used in a trade or business. Basis, as used in the Internal Revenue Code, is also called cost basis or unadjusted basis. Basis is also the starting point for computing adjusted basis.
The adjusted basis of an asset is the basis, increased or decreased by certain amounts. The amount computed as adjusted basis is used to determine gain or loss on the sale, exchange, or other disposition of property. Property used in a trade or business and property held for personal use both start with adjusted basis to compute gain or loss.
|Tangible property can be seen or touched.||Intangible property cannot be seen or touched.|
Licenses to operate
|Real Property||Personal Property|
|Real property is land and anything attached to it.||Personal property is anything that is not real property and can be tangible or intangible.|