Carryover Basis

AAA

DEFINITION of 'Carryover Basis'

A method for determining the tax basis of an asset when it is transferred from one individual to another. Carryover basis is often used when property is given as a gift to someone else and is the method for determining the basis for future tax payments.

INVESTOPEDIA EXPLAINS 'Carryover Basis'

The carryover basis is commonly used in estate planning when transferring property to future heirs. It determines the value of the property at the beginning of the period and is used to determine the tax rate that must be paid on capital gains when the asset is sold.

RELATED TERMS
  1. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  2. Estate Planning

    The collection of preparation tasks that serve to manage an individual's ...
  3. Cost Basis

    1. The original value of an asset for tax purposes (usually the ...
  4. Heir

    HeirA person who inherits some or all of the estate of another ...
  5. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
  6. Gift Tax

    A federal tax applied to an individual giving anything of value ...
Related Articles
  1. Retirement

    Avoiding Too Much Tax On Your Distributions

    IRA assets can't be taxed twice - find out how to avoid paying the second time around.
  2. Taxes

    Tax-Efficient Wealth Transfer

    Taxpayers with large taxable estates were required to take steps to reduce them before 2011.
  3. Options & Futures

    Getting Started On Your Estate Plan

    With some preparation, you can save your heirs from paying a hefty estate tax. Here are some tips.
  4. Retirement

    Refusing An Inheritance

    Contrary to popular belief, inheriting assets isn't always a good thing. Find out what to do if you want to disclaim them.
  5. Options & Futures

    Your Will: Why You Need A Power Of Attorney And Beneficiaries

    What would happen if you were suddenly unable to manage your financial affairs? Preparation is the best protection.
  6. Options & Futures

    How do you calculate the cost basis for a mutual fund over an extended time period?

    Investors must pay taxes on any investment gains they realize. Subsequently, any capital gain realized by an investor over the course of a year must be identified when they file their income ...
  7. Retirement

    Planning Ahead for 2015's Tax Law Changes

    Increased 401(k) limits can help savers put away more money for retirement in 2015—but some new restrictions are coming for IRAs.
  8. Retirement

    Know The Cost of Living Where You Plan To Retire

    When considering where to live after retiring, it's important to keep in mind the type of taxes that would have to be paid at each retirement location.
  9. Year-end tax tips
    Taxes

    7 Ways To Minimize Your 2014 Taxes By December 31

    The year's not quite over yet. See whether taking any of these steps would leave you owing less in 2014 taxes, come April.
  10. The marginal tax rate is based on a progressive tax system.
    Personal Finance

    What's a Marginal Tax Rate?

    The marginal tax rate is based on a progressive tax system, where tax rates for an individual will increase as income rises. This method of taxation aims to fairly tax individuals based upon ...

You May Also Like

Hot Definitions
  1. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  2. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  3. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  4. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  5. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  6. Law Of Supply And Demand

    A theory explaining the interaction between the supply of a resource and the demand for that resource. The law of supply ...
Trading Center