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.

  1. IRS Publication 551 - Basis Of ...

    A document published by the Internal Revenue Service (IRS) that ...
  2. Carryover Provision

    An insurance policy clause that allows the policyholder to shift ...
  3. Modified Cash Basis

    The modified cash basis method combines elements of the two major ...
  4. Uniform Transfer Tax

    A combination of federal estate taxes and federal gift taxes. ...
  5. Cost Basis

    Cost basis is the original value of an asset for tax purposes, ...
  6. Property Tax

    A tax assessed on real estate by the local government. The tax ...
Related Articles
  1. Taxes

    7 Commonly Overlooked Tax Deductions

    Don't pay more taxes than you have to because you've missed taking legitimate tax deductions. Here are just a few you may have overlooked.
  2. Taxes

    Get Ready For The Estate Tax Phase-Out

    Changes to federal legislation will affect how your assets are treated once you're gone - be prepared.
  3. Taxes

    5 Tax Planning Steps to Take Before the Year Ends

    Here are five things you should review soon to ensure you are prepared to file your 2017 tax return.
  4. Taxes

    How to Avoid Gift Taxes

    For most, the answer to the question, “How much is the gift tax?” can be “nothing."
  5. Investing

    How to value a real estate investment property

    Make sure you know what your real estate investment is worth before you sign the ownership papers.
  6. Investing

    How rental property depreciation works

    It's a bit tricky, but it's a valuable tool to make your investment pay off.
  7. Taxes

    What the Gift Tax Rules Mandate

    The lifetime maximum for gift taxes is now $5.6 million. Here's how the gift tax works.
  8. Taxes

    How Does a Tax-Free Exchange Work?

    In regards to the sale of property, particularly in real estate, a 1031 exchange is increasingly being recognized for its tax benefits to investors of all levels.
  9. Taxes

    How property taxes are calculated

    Understanding how property taxes are calculated will help you avoid being overcharged.
  1. Do Flexible Spending Accounts (FSAs) expire?

    Learn if Flexible Spending Accounts (FSAs) expire, and the different ways they expire by providing a expiration date, grace ... Read Answer >>
  2. What is an adjusted cost basis and how is it calculated?

    Learn what adjusted cost basis is, how it is calculated, and why this metric is important for investors, business owners ... Read Answer >>
Hot Definitions
  1. Federal Funds Rate

    The federal funds rate is the interest rate at which a depository institution lends funds maintained at the Federal Reserve ...
  2. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  3. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  4. Entrepreneur

    An entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture.
  5. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  6. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
Trading Center