Cost Basis
The original purchase price of an asset plus any additional costs (improvements, fees). Used to calculate capital gains or losses when the asset is sold.
Cost Basis Definition
Cost basis is what you paid for an asset, adjusted for additional costs like improvements, commissions, or fees. When you sell the asset, your gain or loss is: Sale Price – Cost Basis = Capital Gain (or Loss).
What's Included in Cost Basis
Adjusted Cost Basis
Over time, cost basis gets adjusted:
Cost Basis for Common Business Assets
Why Cost Basis Matters
FAQ
Q: What if I can't find the original purchase price?
A: Check old bank/credit card statements, purchase orders, or loan documents. For inherited property, the cost basis is typically the fair market value at the date of death (stepped-up basis).
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