Basis

If you sell an asset, how do you determine whether you had a taxable gain or loss? It seems simple but it's not. You first have to determine the basis of the asset which is cost plus acquisition and installation charges if you purchased the asset. If you received the asset as a gift, then your basis is the donor's basis or the fair market value (FMV) at time of gift  determined when you sell the gift property. If you sell at a gain it is the donor's basis, and if you sell at a loss it is the lesser of the donor's basis or the FMV at time of gift. Inherited property basis is the FMV at date of death. Does any of this matter if you sell the family car for much less than you paid for it? No because a loss on the sale of property used for personal purposes is not deductible.