1. What is Adjusted Basis?

The adjusted basis is the original cost of an asset plus the cost of improvements minus any depreciation deductions. It's used to determine capital gains or losses for tax purposes in Malaysia.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• Purchase Price — Original cost of the asset (MYR)
• Enhancements — Cost of improvements or additions (MYR)
• Depreciation — Accumulated depreciation claimed (MYR)

Explanation: The formula calculates the adjusted cost basis which is essential for determining capital gains tax when selling an asset.

3. Importance of Cost Basis Calculation

Details: Accurate cost basis calculation is crucial for determining taxable capital gains, which affects your income tax liability in Malaysia.

4. Using the Calculator

Tips: Enter all values in MYR. Ensure depreciation doesn't exceed the sum of purchase price and enhancements. All values must be non-negative.

5. Frequently Asked Questions (FAQ)

Q1: What qualifies as an enhancement?
A: Improvements that add value to the property, prolong its life, or adapt it to new uses (e.g., renovations, extensions).

Q2: How is depreciation calculated?
A: Depreciation methods vary by asset type. Common methods include straight-line and reducing balance methods over prescribed rates.

Q3: Is land depreciable?
A: No, land is not depreciable in Malaysia. Only buildings and improvements can be depreciated.

Q4: What if my adjusted basis is negative?
A: The calculator prevents negative values as they're not permitted for tax purposes. Depreciation cannot exceed the asset's value.

Q5: Does this apply to all assets?
A: This applies to capital assets like property and equipment. Different rules may apply for inventory or financial assets.