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Section 167(g) provides that “The basis on which exhaustion,
wear and tear, and obsolescence are to be allowed in respect of
any property shall be the adjusted basis provided in section 1011
for the purpose of determining the gain on the sale or other
disposition of such property.” See also sec. 1.167(g)-1, Income
Tax Regs. Section 167(g) refers specifically to the adjusted
basis for determining gain provided in section 1011. Section
1011(a) provides:
SEC. 1011(a). General Rule.--The adjusted basis
for determining the gain or loss from the sale or other
disposition of property, whenever acquired, shall be
the basis (determined under section 1012 or other
applicable sections of 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)), adjusted as provided in section 1016.
As a general matter, section 1011 requires the use of the cost
basis determined under section 1012,5 adjusted as provided in
4(...continued)
intangible property. See secs. 1.167(a)-3, 1.167(g)-1, Income
Tax Regs.
5Sec. 1012 provides:
SEC. 1012. BASIS OF PROPERTY--COST.
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). * * *
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Last modified: May 25, 2011