Carry-Over Basis

Carry-Over Basis

by Richard C. Wilson & Family Offices Group Association Team

Family Office Definition: Carry-Over Basis

Carry-Over Basis definition:  The basis is used to determine the amount of taxable appreciation in property when sold. Generally, the donor’s cost basis carries over to the donee for gifted assets.  For example, a stock is purchased in 1988 and gifted in 2008. The donee’s cost basis in the stock is the same as the donor’s (in this case the value in 1988).  The donee is responsible for paying taxes on all capital gains made when the stock is sold at some point in the future, using the carry-over basis. However, losses are limited by the fair market value at the time the gift was made, rather than the carry-over basis.

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