1. What is Unadjusted Basis?

Unadjusted Basis, also known as original cost basis, represents the initial purchase price of an asset before any adjustments for improvements, depreciation, or other factors. It serves as the starting point for calculating capital gains, losses, and depreciation.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( \text{Purchase Price} \) — The original cost paid to acquire the asset

Explanation: The unadjusted basis is simply the amount you originally paid for the asset, including any purchase costs, fees, or other acquisition expenses that are capitalized into the basis.

3. Importance of Unadjusted Basis Calculation

Details: Accurate calculation of unadjusted basis is crucial for tax purposes, investment analysis, and financial reporting. It forms the foundation for determining capital gains/losses when the asset is sold and for calculating depreciation deductions over time.

4. Using the Calculator

Tips: Enter the original purchase price in USD. This should include the actual price paid plus any additional acquisition costs that are part of the basis. The value must be greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What costs are included in the unadjusted basis?
A: The unadjusted basis typically includes the purchase price plus legal fees, title insurance, recording fees, and other direct acquisition costs.

Q2: How does unadjusted basis differ from adjusted basis?
A: Unadjusted basis is the initial cost, while adjusted basis includes improvements, depreciation, and other adjustments made over time.

Q3: Why is unadjusted basis important for tax purposes?
A: It serves as the starting point for calculating capital gains when you sell the asset and determines the amount subject to depreciation deductions.

Q4: Can unadjusted basis change over time?
A: No, the unadjusted basis remains constant as it represents the original purchase price. Only the adjusted basis changes with improvements and depreciation.

Q5: How do I find my unadjusted basis for inherited property?
A: For inherited property, the basis is generally the fair market value at the date of death, not the original purchase price paid by the decedent.