Basis

Basis

The price an investor pays for a security plus any out-of-pocket expenses. It is used to determine capital gains or losses for tax purposes when the stock is sold. Also, for a futures contract, the difference between the cash price and the futures price observed in the market.

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basis

1. In futures trading, the difference between the futures price and the spot price. The basis will narrow as a contract moves closer to settlement.

2. In taxation, the acquisition cost of an asset adjusted for capital distributions (that is, stock dividends). A security's basis is used in calculating gains and losses for tax purposes. Also called cost basis, tax basis. See also adjusted basis.

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Basis. Basis is the total cost of buying an investment or other asset, including the price, commissions, and other charges.

If you sell the asset, you subtract your basis, also known as your cost basis, from the selling price to determine your capital gain or capital loss. If you give the asset away, the recipient's basis is the same amount as yours.

But if you leave an asset to a beneficiary in your will, the person receives the asset at a step-up in basis, which means the basis of the asset is reset to its market value as of the time of your death.

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Basis

The amount assigned to an asset from which gain or loss is determined for income tax purposes when the asset is sold. For assets acquired by purchase, basis is cost. Special rules govern the basis of property received by virtue of another's death or by gift, the basis of stock received on a transfer of property to a controlled corporation, the basis of the property transferred to the corporation, and the basis of property received upon the liquidation of a corporation.