The Unanswered Question in Tufts: What Was the Purchaser’s Basis?


Erik M. Jensen


This article joins the debate by maintaining that at least three basis figures are conceivable and, to a greater or lesser extent, defensible in a Tufts-like situation. Moreover, the article suggests that commentators have, not considered all of the circumstances which can lead a buyer to acquire heavily encumbered property. In at least two situations an acquisition of property subject to a liability whose principal amount is greater than the unencumbered property's value can make economic sense even if the tax consequences to the buyer are not the best imaginable.' This last point, if true, leads to a further proposition: circumstances surrounding an acquisition (including the justifications therefor) should influence the determination of the purchaser's basis in the property.


Purchaser's Basis

Publication Date


Document Type


Place of Original Publication

Virginia Tax Review

Publication Information

10 Virginia Tax Review 455 (1991)

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COinS Erik M. Jensen Faculty Bio