Roughly speaking, your investment (for tax purposes) in certain property (the cost you pay to buy or build a building [or any other asset], plus costs to improve it). If you have a casualty loss, it reduces your adjusted basis. Adjusted basis is used to calculate depreciation (multiply it by the appropriate depreciation or ACRS percentage) and to determine the taxable gain or loss when you sell property (subtract adjusted basis from your net sales proceeds to determine your gain). If you're subject to the alternative minimum tax, your assets may have different adjusted basis for the regular tax and the alternative minimum tax.
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