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Income taxSubject 17 of 19

Adjusted basis

Original basis increased or decreased by tax-law adjustments such as qualifying improvements and allowed depreciation.

Direct answer

What does Adjusted basis mean?

Original basis increased or decreased by tax-law adjustments such as qualifying improvements and allowed depreciation.

Exam cue: Gain on sale generally uses amount realized minus adjusted basis, subject to the applicable tax rules.

What does it look like in a question?

New York example

A qualifying capital improvement increases basis, while allowed depreciation on rental property reduces it.

Common exam trap

What should you not confuse it with?

Repair expense and capital improvement do not receive the same tax treatment.

Related income tax terms

Amount realizedThe total value received on a disposition, adjusted for selling expenses and other items as tax law provides.BasisA tax measurement used to determine gain, loss, depreciation and other tax consequences for property.Capital gainGain from the sale or exchange of a capital asset, calculated under tax law and subject to classification and exclusions.Depreciation recaptureTax treatment that can recharacterize or specially tax part of gain tied to prior depreciation deductions.Like-kind exchangeA tax-deferred exchange under Internal Revenue Code section 1031 for qualifying real property held for investment or productive use in a trade or business.Principal residenceA person's main home for tax purposes, determined from use and the applicable facts and rules.
Sources used2 references with section locators

The curriculum citation confirms exam scope. Definition and rule citations support the explanation itself. Links and locators were checked on August 26, 2026.

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