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119th Congress

Title 26 — Internal Revenue Code

Part II · Chapter 1 — Normal Taxes and Surtaxes

§ 1012. Basis of property—cost

Statutory text

(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).

(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.

(c)

Determinations by account

(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.

(2)

Application to certain regulated investment companies

(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 , shall be treated as a separate account from any such stock acquired on or after such date.

(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—

(i)

subparagraph (A) shall not apply with respect to any stock in such regulated investment company held by such stockholders, and

(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.

(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).

(d)

Average basis for stock acquired pursuant to a dividend reinvestment plan

(1)

In general

In the case of any stock acquired after , 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.

(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).

(3)

Separate accounts; election for treatment as single account

(A)

In general

Rules similar to the rules of subsection (c)(2) shall apply for purposes of this subsection.

(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.

(4)

Dividend reinvestment plan

For purposes of this subsection—

(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.

(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.

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

  1. Aug. 16, 1954, ch. 736, 68A Stat. 296 · 68A Stat. 296

    Enacted · 26 U.S.C. § 1012

    Aug. 16, 1954, ch. 736, 68A Stat. 296

    Source evidence

    Code source credit
    Aug. 16, 1954, ch. 736, 68A Stat. 296

  2. Energy Improvement and Extension Act of 2008

    Pub. L. 110–343 div. B title IV § 403(b) · 122 Stat. 3765

    1. Amended · 26 U.S.C. § 1012

      Pub. L. 110–343 designated first sentence as subsec. (a) and second sentence as subsec. (b)

    2. Inserted · 26 U.S.C. § 1012

      Pub. L. 110–343 inserted headings

    3. Added · 26 U.S.C. § 1012

      Pub. L. 110–343 added subsecs. (c) and (d)

    Source evidence

    Code amendment note
    Pub. L. 110–343 designated first sentence as subsec. (a) and second sentence as subsec. (b), inserted headings, and added subsecs. (c) and (d).

    Enacted provision · exact public law section
    (b) Determination of Basis of Certain Securities on Account by Account or Average Basis Method.— Section 1012 is amended— (1) by striking “The basis of property” and inserting the following: “(a) In General.— The basis of property” , (2) by striking “The cost of real property” and inserting the following: “(b) Special Rule for Apportioned Real Estate Taxes.— The cost of real property” , and (3) by adding at the end the following new subsections: “(c) Determinations by Account.— “(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. “(2) Application to certain funds.— “(A) In general.— Except as provided in subparagraph (B), any stock for which an average basis method is permissible under section 1012 which is acquired before January 1, 2012, shall be treated as a separate account from any such stock acquired on or after such date. “(B) Election fund for treatment as single account.— If a fund described in subparagraph (A) elects to have this subparagraph apply with respect to one or more of its stockholders— “(i) subparagraph (A) shall not apply with respect to any stock in such fund held by such stockholders, and “(ii) all stock in such fund 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. “(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). “(d) Average Basis for Stock Acquired Pursuant to a Dividend Reinvestment Plan.— “(1) In general.— In the case of any stock acquired after December 31, 2010, 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 an open-end fund. “(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). “(3) Separate accounts; election for treatment as single account.— Rules Applicability. similar to the rules of subsection (c)(2) shall apply for purposes of this subsection. “(4) Dividend reinvestment plan.— For purposes of this subsection— “(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. “(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.” .

    Effective date note
    Amendment by section 210(f)(1)–(3) of Pub. L. 113–295 effective as if included in the provisions of the Energy Improvement and Extension Act of 2008, Pub. L. 110–343, div. B, to which such amendment relates, see section 210(h) of Pub. L. 113–295, set out as a note under section 45 of this title.

  3. Tax Technical Corrections Act of 2014

    Pub. L. 113–295 § 210(f)(1)(A) · 128 Stat. 4010

    Substituted · 26 U.S.C. § 1012(c)(2)

    Pub. L. 113–295, § 210(f)(1)(A), substituted “regulated investment companies” for “funds” in heading

    Source evidence

    Code amendment note
    Subsec. (c)(2). Pub. L. 113–295, § 210(f)(1)(A), substituted “regulated investment companies” for “funds” in heading.

    Enacted provision · exact public law section
    (A) by striking “funds” in the heading for paragraph (2) and inserting “regulated investment companies”,

    Effective date note
    Amendment by section 210(f)(1)–(3) of Pub. L. 113–295 effective as if included in the provisions of the Energy Improvement and Extension Act of 2008, Pub. L. 110–343, div. B, to which such amendment relates, see section 210(h) of Pub. L. 113–295, set out as a note under section 45 of this title.

  4. Tax Technical Corrections Act of 2014

    Pub. L. 113–295 § 220(n) · 128 Stat. 4010

    Substituted · 26 U.S.C. § 1012(c)(2)(A)

    Pub. L. 113–295, § 220(n), substituted “this section” for “section 1012”

    Source evidence

    Code amendment note
    Subsec. (c)(2)(A). Pub. L. 113–295, § 220(n), substituted “this section” for “section 1012”.

    Enacted provision · exact public law section
    (n) Subparagraph (A) of section 1012(c)(2) is amended by striking “section 1012” and inserting “this section”.

    Effective date note
    Amendment by section 210(f)(1)–(3) of Pub. L. 113–295 effective as if included in the provisions of the Energy Improvement and Extension Act of 2008, Pub. L. 110–343, div. B, to which such amendment relates, see section 210(h) of Pub. L. 113–295, set out as a note under section 45 of this title.

  5. Tax Technical Corrections Act of 2014

    Pub. L. 113–295 § 210(f)(1)(C) · 128 Stat. 4010

    Substituted · 26 U.S.C. § 1012(c)(2)(B)

    Pub. L. 113–295, § 210(f)(1)(C), substituted “regulated investment company” for “fund” wherever appearing

    Source evidence

    Code amendment note
    Subsec. (c)(2)(B). Pub. L. 113–295, § 210(f)(1)(C), substituted “regulated investment company” for “fund” wherever appearing.

    Enacted provision · exact public law section
    (C) by striking “fund” each place it appears in paragraph (2) and inserting “regulated investment company”.

    Effective date note
    Amendment by section 210(f)(1)–(3) of Pub. L. 113–295 effective as if included in the provisions of the Energy Improvement and Extension Act of 2008, Pub. L. 110–343, div. B, to which such amendment relates, see section 210(h) of Pub. L. 113–295, set out as a note under section 45 of this title.

  6. Tax Technical Corrections Act of 2014

    Pub. L. 113–295 § 210(f)(1)(B) · 128 Stat. 4010

    Struck · 26 U.S.C. § 1012(c)(2)(B)

    Pub. L. 113–295, § 210(f)(1)(B), struck out “fund” after “Election” in heading

    Target inherited from the preceding amendment note.

    Source evidence

    Code amendment note
    Pub. L. 113–295, § 210(f)(1)(B), struck out “fund” after “Election” in heading.

    Enacted provision · exact public law section
    (B) by striking “fund” in the heading for paragraph (2)(B), and

    Effective date note
    Amendment by section 210(f)(1)–(3) of Pub. L. 113–295 effective as if included in the provisions of the Energy Improvement and Extension Act of 2008, Pub. L. 110–343, div. B, to which such amendment relates, see section 210(h) of Pub. L. 113–295, set out as a note under section 45 of this title.

  7. Tax Technical Corrections Act of 2014

    Pub. L. 113–295 § 210(f)(2) · 128 Stat. 4010

    1. Substituted · 26 U.S.C. § 1012(d)(1)

      Pub. L. 113–295, § 210(f)(2), substituted “December 31, 2011” for “December 31, 2010”

    2. Substituted · 26 U.S.C. § 1012(d)(1)

      Pub. L. 113–295, § 210(f)(2), substituted “a regulated investment company” for “an open-end fund”

    Source evidence

    Code amendment note
    Subsec. (d)(1). Pub. L. 113–295, § 210(f)(2), substituted “December 31, 2011” for “December 31, 2010” and “a regulated investment company” for “an open-end fund”.

    Enacted provision · exact public law section
    (2) Paragraph (1) of section 1012(d) is amended— (A) by striking “December 31, 2010” and inserting “December 31, 2011”, and (B) by striking “an open-end fund” and inserting “a regulated investment company”.

    Effective date note
    Amendment by section 210(f)(1)–(3) of Pub. L. 113–295 effective as if included in the provisions of the Energy Improvement and Extension Act of 2008, Pub. L. 110–343, div. B, to which such amendment relates, see section 210(h) of Pub. L. 113–295, set out as a note under section 45 of this title.

  8. Tax Technical Corrections Act of 2014

    Pub. L. 113–295 § 210(f)(3) · 128 Stat. 4010

    Amended · 26 U.S.C. § 1012(d)(3)

    Pub. L. 113–295, § 210(f)(3), amended par. (3) generally. Prior to amendment, text read as follows: “Rules similar to the rules of subsection (c)(2) shall apply for purposes of this subsection.”

    Source evidence

    Code amendment note
    Subsec. (d)(3). Pub. L. 113–295, § 210(f)(3), amended par. (3) generally. Prior to amendment, text read as follows: “Rules similar to the rules of subsection (c)(2) shall apply for purposes of this subsection.”

    Enacted provision · exact public law section
    (3) Paragraph (3) of section 1012(d) 26 USC 1012. is amended to read as follows: “(3) Separate accounts; election for treatment as single account.— “(A) In general.— Rules similar to the rules of subsection (c)(2) shall apply for purposes of this subsection. “(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.” .

    Effective date note
    Amendment by section 210(f)(1)–(3) of Pub. L. 113–295 effective as if included in the provisions of the Energy Improvement and Extension Act of 2008, Pub. L. 110–343, div. B, to which such amendment relates, see section 210(h) of Pub. L. 113–295, set out as a note under section 45 of this title.

10 of 11 references resolved to an enrolled provision · 1 partial

Editorial Notes

Amendments2008–2014 · 2 rounds

2014

Subsec. (c)(2). Pub. L. 113–295, § 210(f)(1)(A), substituted “regulated investment companies” for “funds” in heading.

Subsec. (c)(2)(A). Pub. L. 113–295, § 220(n), substituted “this section” for “section 1012”.

Subsec. (c)(2)(B). Pub. L. 113–295, § 210(f)(1)(C), substituted “regulated investment company” for “fund” wherever appearing.

Pub. L. 113–295, § 210(f)(1)(B), struck out “fund” after “Election” in heading.

Subsec. (d)(1). Pub. L. 113–295, § 210(f)(2), substituted “” for “” and “a regulated investment company” for “an open-end fund”.

Subsec. (d)(3). Pub. L. 113–295, § 210(f)(3), amended par. (3) generally. Prior to amendment, text read as follows: “Rules similar to the rules of subsection (c)(2) shall apply for purposes of this subsection.”

2008

Pub. L. 110–343 designated first sentence as subsec. (a) and second sentence as subsec. (b), inserted headings, and added subsecs. (c) and (d).

Statutory Notes and Related Subsidiaries

Effective Date of 2014 Amendment

Amendment by section 210(f)(1)–(3) of Pub. L. 113–295 effective as if included in the provisions of the Energy Improvement and Extension Act of 2008, Pub. L. 110–343, div. B, to which such amendment relates, see section 210(h) of Pub. L. 113–295, set out as a note under section 45 of this title.

Effective Date of 2008 Amendment

Pub. L. 110–343, div. B, title IV, § 403(e), , 122 Stat. 3860, provided that:

“(1)

In general.—

Except as otherwise provided in this subsection, the amendments made by this section [enacting sections 6045A and 6045B of this title and amending this section and sections 6045 and 6724 of this title] shall take effect on .

“(2)

Extension of period for statements sent to customers.—

The amendments made by subsection (a)(3) [amending section 6045 of this title] shall apply to statements required to be furnished after .”

Credits

1954–2014 · 3 acts
  1. 1954Aug. 16, 1954, ch. 736, 68A Stat. 296
  2. 2008Pub. L. 110–343, div. B, title IV, § 403(b), , 122 Stat. 3857
  3. 2014Pub. L. 113–295, div. A, title II, §§ 210(f)(1)–(3), 220(n), , 128 Stat. 4031, 4032, 4036.
Show as published

(Aug. 16, 1954, ch. 736, 68A Stat. 296; Pub. L. 110–343, div. B, title IV, § 403(b), , 122 Stat. 3857; Pub. L. 113–295, div. A, title II, §§ 210(f)(1)–(3), 220(n), , 128 Stat. 4031, 4032, 4036.)

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