---
kind: "section"
citation: "26 U.S.C. § 1012"
title: "26"
title_heading: "Internal Revenue Code"
number: "1012"
heading: "Basis of property—cost"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/1012"
units:
  - "Subtitle A — Income Taxes"
  - "Chapter 1 — Normal Taxes and Surtaxes"
  - "Subchapter O — Gain or Loss on Disposition of Property"
  - "Part II — Basis Rules of General Application"
---

# §1012. Basis of property—cost

- (a) **In general—** The basis of [property](/usc/26/317.md?p=a) shall be the cost of such [property](/usc/26/317.md?p=a), except as otherwise provided in this subchapter and subchapters C (relating to corporate distributions and adjustments), K (relating to [partners](/usc/26/761.md?p=b) and [partnerships](/usc/26/761.md?p=a)), and P (relating to capital gains and losses).
- (b) **Special rule for apportioned real estate taxes—** The cost of real [property](/usc/26/317.md?p=a) shall not include any amount in respect of real [property](/usc/26/317.md?p=a) taxes which are treated under [section 164(d)](/usc/26/164.md?p=d) as imposed on the [taxpayer](/usc/26/1313.md?p=b).
- (c) **Determinations by account—**
  - (1) **In general—** In the case of the sale, exchange, or other [disposition](/usc/26/424.md?p=c-1) of a specified security on or after the [applicable date](/usc/26/1361.md?p=c-1-B-iii), 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)](#c-2-B), any [stock](/usc/26/1504.md?p=a-4) 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](/usc/26/1504.md?p=a-4) acquired on or after such date.
    - (B) **Election for treatment as single account—** If a [regulated investment company](/usc/26/851.md?p=a) described in [subparagraph (A)](#c-2-A) elects to have this subparagraph apply with respect to one or more of its stockholders—
      - (i) [subparagraph (A)](#c-2-A) shall not apply with respect to any [stock](/usc/26/1504.md?p=a-4) in such [regulated investment company](/usc/26/851.md?p=a) held by such stockholders, and
      - (ii) all [stock](/usc/26/1504.md?p=a-4) in such [regulated investment company](/usc/26/851.md?p=a) which is held by such stockholders shall be treated as covered [securities](/usc/26/368.md?p=a-2-F-vii) described in [section 6045(g)(3)](/usc/26/6045.md?p=g-3) without regard to the date of the acquisition of such [stock](/usc/26/1504.md?p=a-4).

      A rule similar to the rule of the preceding sentence shall apply with respect to a broker holding such [stock](/usc/26/1504.md?p=a-4) as a nominee.

  - (3) **Definitions—** For purposes of this section, the terms “specified security” and “[applicable date](/usc/26/1361.md?p=c-1-B-iii)” shall have the meaning given such terms in [section 6045(g)](/usc/26/6045.md?p=g).
- (d) **Average basis for stock acquired pursuant to a dividend reinvestment plan—**
  - (1) **In general—** In the case of any [stock](/usc/26/1504.md?p=a-4) acquired after December 31, 2011, in connection with a [dividend](/usc/26/316.md?p=a) reinvestment plan, the basis of such [stock](/usc/26/1504.md?p=a-4) 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](/usc/26/1504.md?p=a-4) in a [regulated investment company](/usc/26/851.md?p=a).
  - (2) **Treatment after transfer—** In the case of the transfer to another account of [stock](/usc/26/1504.md?p=a-4) to which [paragraph (1)](#d-1) applies, such [stock](/usc/26/1504.md?p=a-4) shall have a cost basis in such other account equal to its basis in the [dividend](/usc/26/316.md?p=a) 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)](#c-2) shall apply for purposes of this subsection.
    - (B) **Average basis method—** Notwithstanding [paragraph (1)](#d-1), in the case of an election under rules similar to the rules of [subsection (c)(2)(B)](#c-2-B) with respect to [stock](/usc/26/1504.md?p=a-4) held in connection with a [dividend](/usc/26/316.md?p=a) reinvestment plan, the average basis method is permissible with respect to all such [stock](/usc/26/1504.md?p=a-4) without regard to the date of the acquisition of such [stock](/usc/26/1504.md?p=a-4).
  - (4) **Dividend reinvestment plan—** For purposes of this subsection—
    - (A) **In general—** The term “[dividend](/usc/26/316.md?p=a) reinvestment plan” means any arrangement under which [dividends](/usc/26/316.md?p=a) on any [stock](/usc/26/1504.md?p=a-4) are reinvested in [stock](/usc/26/1504.md?p=a-4) identical to the [stock](/usc/26/1504.md?p=a-4) with respect to which the [dividends](/usc/26/316.md?p=a) are paid.
    - (B) **Initial stock acquisition treated as acquired in connection with plan—** [Stock](/usc/26/1504.md?p=a-4) shall be treated as acquired in connection with a [dividend](/usc/26/316.md?p=a) reinvestment plan if such [stock](/usc/26/1504.md?p=a-4) is acquired pursuant to such plan or if the [dividends](/usc/26/316.md?p=a) paid on such [stock](/usc/26/1504.md?p=a-4) are subject to such plan.

## Source credit

(Aug. 16, 1954, ch. 736, 68A Stat. 296; Pub. L. 110–343, div. B, title IV, § 403(b), Oct. 3, 2008, 122 Stat. 3857; Pub. L. 113–295, div. A, title II, §§ 210(f)(1)–(3), 220(n), Dec. 19, 2014, 128 Stat. 4031, 4032, 4036.)

## Notes

### Editorial Notes

### 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).

### 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), Oct. 3, 2008, 122 Stat. 3860, provided that: 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. 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.”