Carryover Basis

In a tax-deferred exchange, the Adjusted Tax Basis of the property surrendered that is used to determine the tax basis of the property acquired. See Basis (TAX).
Example: Abel exchanges land with Baker in a tax-deferred exchange. Abel's Adjusted Tax Basis in the Land given up was $10,000. The carryover basis will therefore be $10,000 and (in the absence of Boot) that will be Abel's tax basis in the land acquired from Baker.

Method used in the valuation of property acquired from a decedent for tax purposes. The unified transfer tax of 1976 provides for the valuation of property to be the adjusted basis immediately preceding death. This adjusted basis is then further adjusted with respect to such aspects of a transfer as appreciated property, election of fair market value for personal items, and exceptions for small estates.