# 26 U.S.C. § 1012: Basis of property—cost Source: OLRC release point 119-134 . Cite pinpoints as 26 U.S.C. § 1012(a)(1). ## § 1012(a) In general 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). ## § 1012(b) Special rule for apportioned real estate taxes 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. ## § 1012(c) Determinations by account **§ 1012(c)(1) In general.** 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. **§ 1012(c)(2) Application to certain regulated investment companies.** **§ 1012(c)(2)(A) In general.** 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. **§ 1012(c)(2)(B) Election for treatment as single account.** If a regulated investment company described in subparagraph (A) elects to have this subparagraph apply with respect to one or more of its stockholders— **§ 1012(c)(2)(B)(i)** subparagraph (A) shall not apply with respect to any stock in such regulated investment company held by such stockholders, and **§ 1012(c)(2)(B)(ii)** all stock in such regulated investment company which is held by such stockholders shall be treated as covered securities described in section 6045(g)(3) without regard to the date of the acquisition of such stock. A rule similar to the rule of the preceding sentence shall apply with respect to a broker holding such stock as a nominee. **§ 1012(c)(3) Definitions.** For purposes of this section, the terms “specified security” and “applicable date” shall have the meaning given such terms in section 6045(g). ## § 1012(d) Average basis for stock acquired pursuant to a dividend reinvestment plan **§ 1012(d)(1) In general.** 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. **§ 1012(d)(2) Treatment after transfer.** 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). **§ 1012(d)(3) Separate accounts; election for treatment as single account.** **§ 1012(d)(3)(A) In general.** Rules similar to the rules of subsection (c)(2) shall apply for purposes of this subsection. **§ 1012(d)(3)(B) Average basis method.** 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. **§ 1012(d)(4) Dividend reinvestment plan.** For purposes of this subsection— **§ 1012(d)(4)(A) In general.** 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. **§ 1012(d)(4)(B) Initial stock acquisition treated as acquired in connection with plan.** 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. ## Regulations - [Treas. Reg. § 1.1012-1](/26/reg/1.1012-1.md): Basis of property. (interprets § 1012) - [Treas. Reg. § 1.1012-2](/26/reg/1.1012-2.md): Transfers in part a sale and in part a gift. (interprets § 1012) ## Final rules - [89 FR 56480](https://www.federalregister.gov/documents/2024/07/09/2024-14004/gross-proceeds-and-basis-reporting-by-brokers-and-determination-of-amount-realized-and-basis-for) (2024): Gross Proceeds and Basis Reporting by Brokers and Determination of Amount Realized and Basis for Digital Asset Transactions - [75 FR 64072](https://www.federalregister.gov/documents/2010/10/18/2010-25504/basis-reporting-by-securities-brokers-and-basis-determination-for-stock) (2010): Basis Reporting by Securities Brokers and Basis Determination for Stock - [61 FR 30133](https://www.federalregister.gov/documents/1996/06/14/96-14918/debt-instruments-with-original-issue-discount-contingent-payments-anti-abuse-rule) (1996): Debt Instruments With Original Issue Discount; Contingent Payments; Anti-Abuse Rule ## Leading cases - [Bixby v. Commissioner, 58 T.C. 757 (1972)](https://www.courtlistener.com/opinion/4703383/bixby-v-commissioner/) - [Estate of Leavitt v. Commissioner, 90 T.C. 206 (1988)](https://www.courtlistener.com/opinion/4706730/estate-of-leavitt-v-commissioner/) ## Connections Cites: § 164 Taxes; § 6045 Returns of brokers Cited by: § 170 Charitable, etc., contributions and gifts; § 451 General rule for taxable year of inclusion; § 1011 Adjusted basis for determining gain or loss; § 1033 Involuntary conversions; § 1043 Sale of property to comply with conflict-of-interest requirements; § 1045 Rollover of gain from qualified small business stock to another qualified small business stock; § 1278 Definitions and special rules; § 1361 S corporation defined; § 1397B Nonrecognition of gain on rollover of empowerment zone investments; § 6045 Returns of brokers Derived from: 1939 § 113(a) ## Amendments - 1954-08-16: [Act Aug. 16, 1954, ch. 736](/26/act/1954-ch736.md), 68A Stat. 296 - 2008-10-03: [Pub. L. 110-343](/26/act/110-343.md), 122 Stat. 3857 - 2014-12-19: [Pub. L. 113-295](/26/act/113-295.md), 128 Stat. 4031