Basis is an amount usually representing the taxpayer's cost in acquiring an asset. It is crucial for various tax purposes including computation of gain or loss on the sale or exchange of the asset and depreciation with respect to the asset.
Capital gain distributions refer to payments made by mutual funds or corporations to their investors, representing the gains earned from the sale of securities or liquidated assets. This distribution retains its character as capital gains when passed on to investors.
Original Issue Discount (OID) refers to the discount from par value at the time a bond or debt instrument is issued. It plays a crucial role in the bond market, particularly in zero coupon bonds, and involves complex tax treatments.
A return of capital refers to a distribution from a corporation to its shareholders that is not paid out of the corporation's earnings and profits. It represents a return of the shareholders' investment in the stock of the company.
Tax basis refers to the value used for tax purposes to determine the gain or loss on the sale or transfer of an asset, and it includes various adjustments over time.
