asset. The taxpayer reduces the sale price and increases the cost basis (reducing the capital gain on which tax is due) to reflect transaction costs such as brokerage fees, certain legal fees, and the transaction tax on sales.

Depreciation

In contrast, when a business is entitled to a depreciation deduction on an asset used in the business (such as for each year's wear on a piece of machinery), it reduces the cost basis of that asset by that amount, potentially to zero. The reduction in

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