Take the case to the Supreme Court for any other accounting being an illegal government taking.
Where did you get the idea you can correct the basis for inflation? I’ve never heard of that.
The formula for calculating your cost basis on your main home is as follows:
Purchase price
+ Purchase costs (title & escrow fees, real estate agent commissions, etc.)
+ Improvements (replacing the roof, new furnace, etc.) [NB - from About.com - I think maintenance is excluded and roof and furnace are maintenance items]
+ Selling costs (title & escrow fees, real estate agent commissions, etc.)
- Accumulated depreciation (for example, if you ever took the office in the home deduction)
= Cost Basis