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Let’s TalkAdjusted Basis
An accounting or tax term for the original cost of an asset recorded on the books less any adjustments to the value of the asset, such as depreciation.
Example
If the original cost of a piece of equipment is $100,000 and the accumulated depreciation is $30,000, the adjusted basis is $70,000.
See Also
Allocation of purchase price, book value, depreciation.
Tips
The value of an asset, or its adjusted basis, has little to do with the actual value of a business. The primary relevance of the adjusted basis of an asset comes when calculating the taxes due when selling a business. The tax due on the sale of a business is calculated as the gain on any difference between the adjusted basis and the amount allocated to the asset.
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