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Definition Cost Basis - the purchase price of an asset, used to calculate appreciated value, and upon sale the capital gains tax.
Application in Divorce Each piece of property has a cost basis. The current value minus the purchase price is the appreciated value. Depending on the asset, the appreciated value can be taxed. The most common form is either long-term or short-term capital gains. In divorce, it is very important to understand the tax ramifications of certain property settlements. What appears to be a great deal may not be after taxes are paid.

See also Capital Gains Tax; Appreciated Value.

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  1. Date of Purchase or Date of Marriage
    A common made mistake when determining the value of a marital asset purchased prior to the marriage is a failure to consider the fraction of time it was owned before the marriage. Taking the straight appreciated value of the asset without considering the ownership before marriage inflates the value of the marital portion.
    Contributed on 6/27/2007 by: DivorceDex.com Staff
    Category: Property Valuations  (Applicable in All States)
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