26 U.S.C. § 1012
Section 1012 · Basis of property - cost
Amended 3 times on record
Applied in 147 court decisions — leading case United States v. Davis (1962)
Most recently applied in Curtis Inv. Co. v. Comm'r (December 2018)
Cases citing this section usually also cite 26 U.S.C. § 1001 · 26 U.S.C. § 61 · 26 U.S.C. § 167
How often courts cite this section
Court decisions citing this, by year.Markers show enactment, consequential amendments, and circuit splits over this section — watch for a citation surge after a change or a disagreement. The dip in the last several years is a data-coverage gap, not a real trend — our corpus holds fewer opinions from the most recent years, so recent citations are undercounted.
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).
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.
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.
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.
If a regulated investment company described in subparagraph (A) elects to have this subparagraph apply with respect to one or more of its stockholders—
subparagraph (A) shall not apply with respect to any stock in such regulated investment company held by such stockholders, and
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.
For purposes of this section, the terms “specified security” and “applicable date” shall have the meaning given such terms in section 6045(g).
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.
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).
Rules similar to the rules of subsection (c)(2) shall apply for purposes of this subsection.
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.
For purposes of this subsection—
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.
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.
Editorial notes U.S. Code · Office of the Law Revision Counsel
Amendments
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 “December 31, 2011” for “December 31, 2010” 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).
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), Oct. 3, 2008, 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 January 1, 2011.
“(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 December 31, 2008.”