Cost and Basis
The basis of purchased property is usually its cost. The whole purchase price includes:
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Cash
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Mortgages and other liabilities (new, assumed, “subject to,” recourse and nonrecourse)
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The basis of property given in exchange for the property
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Back taxes or interest that were the liability of the previous owner, but were paid by the present owner, and
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Freight and installation charges.
The basis DOES NOT include interest, other than described in the fourth item above.