Basis

Basis is a term referring to the book value of investments (securities) or other assets. Basis includes the original purchase price and fees associated with the purchase and maintenance of the asset. In addition other costs are included in the basis calculation including time based costs (interests, brokerage maintenance costs), registration and government taxes. This term is most commonly found within the tax code and is used to determine gain or loss associated with the sale of the particular investment.

Basis in Business

Basis in Business

Basis is a business term used to identify the value of an individual or entity's investment in an entrepreneurial endeavor.   It is customarily linked to taxation as this term is used by the Internal Revenue Code to determine gain or loss.   To further compound its meaning  'basis'  is sometimes substituted for the term  'equity'.

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Negative Basis in Business – Tax Shelters

Negative Basis in Business

Negative basis in business refers to the value of the equity investment in the company.  It literally means you have no actual equity investment and worse you owe somebody money because other parties have fronted the necessary capital to make the business viable.

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Landlord – Business Dynamics and Economics

Landlord Business Dynamics

I love the game of Monopoly.  My sons enjoy playing it too.  But we all have the same complaint about the game; it takes forever to accumulate all the wealth and ultimately win the game.  Being a landlord means the same thing.  It will take a long time to accumulate wealth.  So for those of you considering becoming a landlord, there are certain business dynamics and economics you should understand. 

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Basis for Tax Purposes

Basis for Tax Purposes

Basis is a term used in computing gains and losses on the disposition of an asset.  For any business owner or individual taxpayer it is important to understand what the Internal Revenue Service (IRS) is really seeking.  What is your tax basis in an asset? 

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At-Risk Rules – An Elementary Understanding

At-Risk Rules

Code Section 465 of the Internal Revenue Code defines ‘At-Risk’ as the financial value the taxpayer has in jeopardy related to the business activity the taxpayer is invested in as some form of an owner.  Effectively, the taxpayer may only take losses on his tax return contingent on the loss being directly tied to invested dollars with some form of tax basis.

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