By: Martin M. Shenkman, CPA, MBA, JD
The amount you invested to purchase property, plus the cost of capital improvements, less depreciation is your adjusted tax basis in that property. For an interest in an LLC, the calculation is more complex. Where the LLC is treated as a partnership for tax purposes, your adjusted tax basis could include the fair market value of property you contributed to the LLC, the amount you paid to purchase the LLC interest, your pro-rata share of certain LLC debts, less amounts distributed to you, and so forth. Your adjusted tax basis is the amount used to determine any taxable gain or loss on your sale of the LLC or other asset.
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