Business Glossary

value used as a starting point to compute depreciation or gain on the disposition of fixed assets for tax purposes. The adjusted basis is similar to the concept of book value . It is the taxpayer's basis at the time of quisition-usually cost-increased or decreased by certain required modifications such as capital improvements.

base price from which to judge capital gains or losses upon sale of an asset like a stock or bond. The cost of commissions in effect is deducted at the time of sale when net proceeds are used for tax purposes. The price must be adjusted to account for any stock splits that have occurred since the initial purchase before arriving at the adjusted basis.