Cost basis is the original value or purchase price of an asset, including commissions and fees, used to calculate capital gains or losses for tax purposes. When an asset is sold, the difference between the sale price and the cost basis determines the taxable profit or deductible loss.
Example
“She bought 100 shares at $45 with a $10 commission, giving her a cost basis of $45.10 per share, which she used to calculate her capital gains when she sold at $60.”