Internal Revenue Code · 26 U.S.C.
§ 1012. Basis of property—cost
Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).
Cite as 26 U.S.C. § 1012
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Enacted
- October 3, 2008 by Pub. L. 110–343
- Last amended
- December 19, 2014 by Pub. L. 113–295
- Amendments
- 1 dated changes in the source credit
- Length
- 4 subsections · 643 words · about 3 min to read
- Defines
- 3 terms
- Cross-references
- cites 2; cited by 10 Code sections and 50 other regulations
- Regulations
- 2 issued under this section
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).
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.
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.
For purposes of this section, the terms “specified security” and “applicable date” shall have the meaning given such terms in section 6045(g).
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.
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).
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.
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.
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.)
Terms defined here
Where the text says “the term … means”. Select a term to jump to its definition.
Regulations under this section
Treasury regulations (26 CFR) issued under § 1012
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 2 other sections
Cited by 10 Code sections
- § 170(f)(15)(A) Charitable, etc., contributions and gifts
- § 451(k)(9) General rule for taxable year of inclusion
- § 1011(a) Adjusted basis for determining gain or loss
- § 1033(a)(2)(A)(ii) Involuntary conversions
- § 1043(b)(4) Sale of property to comply with conflict-of-interest requirements
- § 1045(b)(2) Rollover of gain from qualified small business stock to another qualified small business stock
- § 1278(a)(1)(D)(ii)(I) Definitions and special rules
- § 1361(e)(1)(C) S corporation defined
- § 1397B(b)(3) Nonrecognition of gain on rollover of empowerment zone investments
- § 6045(g)(2)(B)(i)(I) Returns of brokers
Cited in 50 regulations not issued under it
- § 1.42-6 Buildings qualifying for carryover allocations.
- § 1.45D-1 New markets tax credit.
- § 1.46-3 Qualified investment.
- § 1.48-3 Used section 38 property.
- § 1.48D-2 Definitions.
- § 1.83-4 Special rules.
- § 1.163-10T Qualified residence interest (temporary).
- § 1.163(j)-1 Definitions.
- § 1.164-6 Apportionment of taxes on real property between seller and purchaser.
- § 1.167(l)-2 Public utility property; election as to post-1969 property representing growth in capacity.
- § 1.168(k)-2 Additional first year depreciation deduction for property acquired and placed in service after September 27, 2017.
- § 1.170A-4 Reduction in amount of charitable contributions of certain appreciated property.
- § 1.179-4 Definitions.
- § 1.199A-2 Determination of W-2 wages and unadjusted basis immediately after acquisition of qualified property.
- § 1.263(a)-3 Amounts paid to improve tangible property.
- § 1.266-1 Taxes and carrying charges chargeable to capital account and treated as capital items.
- § 1.358-2 Allocation of basis among nonrecognition property.
- § 1.514(a)-2 Business lease rents and deductions for taxable years beginning before January 1, 1970.
- § 1.585-5 Denial of bad debt reserves for large banks.
- § 1.611-2 Rules applicable to mines, oil and gas wells, and other natural deposits.
- § 1.611-3 Rules applicable to timber.
- § 1.612-1 Basis for allowance of cost depletion.
- § 1.617-3 Recapture of exploration expenditures.
- § 1.636-1 Treatment of production payments as loans.
Show 26 more
- § 1.672(f)-4 Recharacterization of purported gifts.
- § 1.751-1 Unrealized receivables and inventory items.
- § 1.822-3 Amortization of premium and accrual of discount.
- § 1.822-7 Amortization of premium and accrual of discount.
- § 1.822-10 Amortization of premium and accrual of discount.
- § 1.897-6T Nonrecognition exchanges applicable to corporations, their shareholders, and other taxpayers, and certain transfers of property in corporate reorganizations (temporary).
- § 1.904-4 Separate application of section 904 with respect to certain categories of income.
- § 1.907(a)-0 Introduction (for taxable years beginning after December 31, 1982).
- § 1.1001-1 Computation of gain or loss.
- § 1.1011-1 Adjusted basis.
- § 1.1033(a)-2 Involuntary conversion into similar property, into money or into dissimilar property.
- § 1.1059A-1 Limitation on taxpayer's basis or inventory cost in property imported from related persons.
- § 1.1223-1 Determination of period for which capital assets are held.
- § 1.1245-2 Definition of recomputed basis.
- § 1.1250-2 Additional depreciation defined.
- § 1.1254-3 Section 1254 costs immediately after certain acquisitions.
- § 1.1254-4 Special rules for S corporations and their shareholders.
- § 1.1254-5 Special rules for partnerships and their partners.
- § 1.1361-1 S corporation defined.
- § 1.1400Z2(d)-1 Qualified opportunity funds and qualified opportunity zone businesses.
- § 1.1400Z2(d)-2 Qualified opportunity zone business property.
- § 1.1502-13 Intercompany transactions.
- § 1.1502-32 Investment adjustments.
- § 1.9200-1 Deduction for motor carrier operating authority.
- § 1.9200-2 Manner of taking deduction.
- § 301.7701-3 Classification of certain business entities.
Amendment history
From the source credit and the official notes, newest first.
Where it sits in the Code
- Subtitle A Income Taxes
- Chapter 1 NORMAL TAXES AND SURTAXES
- Subchapter O Gain or Loss on Disposition of Property
- Part II BASIS RULES OF GENERAL APPLICATION
Nearby sections
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
Amendments
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 Subsidiaries
Effective 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.”