Carryover basis refers to the tax basis of an asset that is transferred from one taxpayer to another, typically in the context of a partnership or estate. This means that the receiving party takes on the original basis of the asset, rather than establishing a new basis based on fair market value. This concept is crucial during sales or distributions of partnership interests and can significantly affect the tax implications for both the seller and buyer.
congrats on reading the definition of carryover basis. now let's actually learn it.