Cost Basis

Cost basis is your original investment in an asset — usually the purchase price plus commissions and any reinvested dividends. When you sell, your taxable gain or loss is the sale price minus your cost basis, so tracking basis accurately is what keeps you from overpaying tax.

Basis matters in several planning contexts. The return-of-basis portion of a taxable-account withdrawal isn't taxed again and doesn't count toward MAGI. Inherited assets generally receive a 'stepped-up' basis to their value at the date of death, often erasing decades of unrealized gains. And specific-lot selling lets you choose which shares to sell to manage the gain.