Property as income

In the first example above, the taxpayer might have received their land in exchange for supplying a service to its previous owner. In that case, the basis in the property would become its fair market value—the same amount claimed by the taxpayer as income. Assuming $10,000 was the fair market value, this achieves the same result as if the taxpayer had received a $10,000 payment from the owner and then bought the land for that amount.