26 U.S.C. § 1012

Basis of property—cost

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(a) In general

The basis of property shall be the cost of such property, except as otherwise provided in this subchapter and subchapters C (relating to corporate distributions and adjustments), K (relating to partners and partnerships), and P (relating to capital gains and losses).

(b) Special rule for apportioned real estate taxes

The cost of real property shall not include any amount in respect of real property taxes which are treated under section 164(d) as imposed on the taxpayer.

In the case of the sale, exchange, or other disposition of a specified security on or after the applicable date, the conventions prescribed by regulations under this section shall be applied on an account by account basis.

(2) Application to certain regulated investment companies(A) In general

Except as provided in subparagraph (B), any stock for which an average basis method is permissible under this section which is acquired before January 1, 2012, shall be treated as a separate account from any such stock acquired on or after such date.

(B) Election for treatment as single accountIf a regulated investment company described in subparagraph (A) elects to have this subparagraph apply with respect to one or more of its stockholders—(i) subparagraph (A) shall not apply with respect to any stock in such regulated investment company held by such stockholders, and(ii) all stock in such regulated investment company which is held by such stockholders shall be treated as covered securities described in section 6045(g)(3) without regard to the date of the acquisition of such stock.A rule similar to the rule of the preceding sentence shall apply with respect to a broker holding such stock as a nominee.(3) Definitions

For purposes of this section, the terms “specified security” and “applicable date” shall have the meaning given such terms in section 6045(g).

(d) Average basis for stock acquired pursuant to a dividend reinvestment plan(1) In general

In the case of any stock acquired after December 31, 2011, in connection with a dividend reinvestment plan, the basis of such stock while held as part of such plan shall be determined using one of the methods which may be used for determining the basis of stock in a regulated investment company.

(2) Treatment after transfer

In the case of the transfer to another account of stock to which paragraph (1) applies, such stock shall have a cost basis in such other account equal to its basis in the dividend reinvestment plan immediately before such transfer (properly adjusted for any fees or other charges taken into account in connection with such transfer).

(3) Separate accounts; election for treatment as single account(A) In general

Rules similar to the rules of subsection (c)(2) shall apply for purposes of this subsection.

(B) Average basis method

Notwithstanding paragraph (1), in the case of an election under rules similar to the rules of subsection (c)(2)(B) with respect to stock held in connection with a dividend reinvestment plan, the average basis method is permissible with respect to all such stock without regard to the date of the acquisition of such stock.

(4) Dividend reinvestment planFor purposes of this subsection—(A) In general

The term “dividend reinvestment plan” means any arrangement under which dividends on any stock are reinvested in stock identical to the stock with respect to which the dividends are paid.

(B) Initial stock acquisition treated as acquired in connection with plan

Stock shall be treated as acquired in connection with a dividend reinvestment plan if such stock is acquired pursuant to such plan or if the dividends paid on such stock are subject to such plan.

(Aug. 16, 1954, ch. 736, 68A Stat. 296; Pub. L. 110–343, div. B, title IV, § 403(b), Oct. 3, 2008, 122 Stat. 3857; Pub. L. 113–295, div. A, title II, §§ 210(f)(1)–(3), 220(n), Dec. 19, 2014, 128 Stat. 4031, 4032, 4036.)Editorial NotesAmendments

2014—Subsec. (c)(2). Pub. L. 113–295, § 210(f)(1)(A), substituted “regulated investment companies” for “funds” in heading.

Subsec. (c)(2)(A). Pub. L. 113–295, § 220(n), substituted “this section” for “section 1012”.

Subsec. (c)(2)(B). Pub. L. 113–295, § 210(f)(1)(C), substituted “regulated investment company” for “fund” wherever appearing.

Pub. L. 113–295, § 210(f)(1)(B), struck out “fund” after “Election” in heading.

Subsec. (d)(1). Pub. L. 113–295, § 210(f)(2), substituted “December 31, 2011” for “December 31, 2010” and “a regulated investment company” for “an open-end fund”.

Subsec. (d)(3). Pub. L. 113–295, § 210(f)(3), amended par. (3) generally. Prior to amendment, text read as follows: “Rules similar to the rules of subsection (c)(2) shall apply for purposes of this subsection.”

2008—Pub. L. 110–343 designated first sentence as subsec. (a) and second sentence as subsec. (b), inserted headings, and added subsecs. (c) and (d).

Statutory Notes and Related SubsidiariesEffective Date of 2014 Amendment

Amendment by section 210(f)(1)–(3) of Pub. L. 113–295 effective as if included in the provisions of the Energy Improvement and Extension Act of 2008, Pub. L. 110–343, div. B, to which such amendment relates, see section 210(h) of Pub. L. 113–295, set out as a note under section 45 of this title.

Effective Date of 2008 Amendment

Pub. L. 110–343, div. B, title IV, § 403(e), Oct. 3, 2008, 122 Stat. 3860, provided that:“(1)In general.—Except as otherwise provided in this subsection, the amendments made by this section [enacting sections 6045A and 6045B of this title and amending this section and sections 6045 and 6724 of this title] shall take effect on January 1, 2011.“(2)Extension of period for statements sent to customers.—The amendments made by subsection (a)(3) [amending section 6045 of this title] shall apply to statements required to be furnished after December 31, 2008.”

Notes of Decisions

Cited in 69 cases, 1957–2020 · leading case: Washington Mut. Inc. v. United States, 636 F.3d 1207 (9th Cir. 2011).

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Washington Mut. Inc. v. United States, 636 F.3d 1207 (9th Cir. 2011). · cites it 6× “Washington Mutual alleged that Home Savings' tax basis in the RAP rights was $46,809,000 under 26 U.S.C. § 1012 , the general cost-basis rule, $63,000,000 under 26 U.”

United States v. Woods, 134 S. Ct. 557 (2013). “V), including specialized rules for calculating the adjusted basis of a partner's interest in a partnership, see § 705 (2006 ed.”

The Black & Decker Corp. v. United States, 436 F.3d 431 (4th Cir. 2006). “” 26 U.S.C. § 1012 . (Usually, basis is “the original cost of property used in computing capital gains or losses for income tax purposes.”

Comm'r v. Fink, 483 U.S. 89 (1987). · cites it 2× “Fink's sister owned 10 percent of the stock, his brother-in-law owned 4.”

Coltec Indus., Inc. v. United States, 62 Fed. Cl. 716 (Fed. Cl. 2004). · cites it 4× “See 26 U.S.C. § 1012 *734 (“Section 1012”). 18 Congress has determined that the transferor’s basis in stock received from a Section 351 exchange is the same as the transferor’s basis in the property conveyed in exchange for the transferee’s stock.”

Superior Trading, LLC v. Comm'r, 728 F.3d 676 (7th Cir. 2013). “26 U.S.C. § 1012 . The buyer therefore has no built-in loss; that loss was recognized by Arapuá, once Arapuá’s “contribution” to Warwick is recharacterized as a sale to the shelter investors.”

Southgate Master Fund, L.L.C. Ex Rel. Montgomery Capital Advisors, LLC v. United States, 659 F.3d 466 (5th Cir. 2011). “See 26 U.S.C. § 1012 (a). See generally 26 U.”

Long Term Capital Holdings v. United States, 330 F. Supp. 2d 122 (D. Conn. 2004). “st or the interdependence test, OTC’s contributions of preferred stock to LTCP on August 1, 1996 and November 1, 1996 in exchange for a partnership interest and OTC’s subsequent sale of that partnership interest to LTCM on October 31, 1997 must be stepped together into a single…”

Bakersfield Energy Partners, LP v. Comm'r, 568 F.3d 767 (9th Cir. 2009). “See 26 U.S.C. § 1012 . In general, a taxpayer’s gross income includes gains from sales of property, where “gain” is defined as the sales price minus the taxpayer’s basis in the property.”

Est. of Sydney S. Baron, Sylvia S. Baron, Adm'x, & Sylvia S. Baron v. Comm'r of Internal Revenue, 798 F.2d 65 (2d Cir. 1986). “§ 167 (g), provides that the basis for depreciation is "the adjusted basis provided in section 1011 for the purpose of determining the gain on the sale or other disposition of the property.”

Intermountain Ins. Serv. of Vail v. Comm'r of Internal Revenue Serv., 650 F.3d 691 (D.C. Cir. 2011). “26 U.S.C. § 1012 . When a taxpayer sells property, he realizes gain from that sale, and that gain contributes to gross income.”

United States v. Chicago, Burlington & Quincy R.R., 412 U.S. 401 (1973). · cites it 2× “[7] Section 113 (a) of the 1939 Code and § 1012 of the 1954 Code, 26 U. S. C. § 1012 , state the general rule that the "basis of property shall be the cost of such property.”

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— 26 U.S.C. § 1012(a) — 1 case

Amergen Energy Co. v. United States, 113 Fed. Cl. 52 (Fed. Cl. 2013).

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