Carryover Basis

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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.

BREAKING DOWN '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.

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RELATED FAQS
  1. 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 ... Read Full Answer >>
  2. Can I put my IRA in a trust?

    You cannot put your IRA in a trust while you are living. You can, however, name a trust as the beneficiary of your IRA and ... Read Full Answer >>
  3. How is cost basis calculated on an inherited asset?

    Typically, the cost basis on inherited assets is the fair market value as of the time of the decedent's death or actual transfer ... Read Full Answer >>
  4. How does the trust maker transfer funds into a revocable trust?

    Once a revocable trust is created, a trust maker transfers funds or property into the trust by including them in a list with ... Read Full Answer >>
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