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I have to determine the adjusted basis for my parents house purchased in 1946. Does the time value of money enter into the determination of basis?

Every dollar my parents paid in 1946 would be worth much more than a dollar today so do you take inflation or the time value of money into consideration when determining the basis of real property?

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jerry2000
Alumni

I have to determine the adjusted basis for my parents house purchased in 1946. Does the time value of money enter into the determination of basis?

No. The time value of money does not enter into it at all. The adjusted basis is simply the dollar amount that they paid for it plus non-deductible cost paid at closing plus the value of any improvements that they made over the years. You might want to look at IRS Pub. 523, Selling Your Home for tips on basis.

http://www.irs.gov/pub/irs-pdf/p523.pdf

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jerry2000
Alumni

I have to determine the adjusted basis for my parents house purchased in 1946. Does the time value of money enter into the determination of basis?

No. The time value of money does not enter into it at all. The adjusted basis is simply the dollar amount that they paid for it plus non-deductible cost paid at closing plus the value of any improvements that they made over the years. You might want to look at IRS Pub. 523, Selling Your Home for tips on basis.

http://www.irs.gov/pub/irs-pdf/p523.pdf

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