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Cost basis is the original value of an asset, like a stock or property, used to figure out how much profit or loss you made when you sell it.
In Depth
Cost basis is the amount you paid for an asset, plus any additional costs like commissions or fees. It's a key number for tax purposes because it determines your capital gain or loss when you sell the asset. If you sell for more than your cost basis, you have a gain; if you sell for less, you have a loss. Keeping good records of your cost basis is important for accurate tax reporting.
Example
If you bought 100 shares of a stock for $50 each and paid $10 in commission, your cost basis for those shares is $5,010.