Definition: Cost basis is the original price of an asset, such as stocks, bonds, mutual funds, property, or equipment. Cost basis includes the purchase price and any associated purchase costs.
Additional purchase costs included in cost basis are shipping, sales tax, installation costs, commissions and fees on the purchase, and certain tax-related adjustments. Cost basis may increase or decrease because of tax-deferred gains or tax-deferred losses.
Cost basis forms the foundation for calculating adjusted basis, capital gains, capital losses, and depreciation.
