™A $1,000 purchase plus $5 of capitalized purchase costs starts at $1,005 basis in a simple example; later adjustments can change it.
Taxes & Account Rules
Cost basis
The value used to calculate a taxable gain or loss, generally adjusted for certain transactions and events.
Plain-English context
Put the definition to work.
Do not equate tax basis with a broker's display without reviewing adjustments, transferred lots, fees and basis elections.
Further reading and verification. Examples are hypothetical, not current quotes or recommendations. Product terms, tax treatment and market rules can change. IRS Publication 550 — investment income and expenses