Definitions (2)

1. Purchase price, including commissions and other expenses, used to determine capital gains and capital losses for tax purposes. This can be determined by several methods. For a purchased investment, the basis is the amount paid. If inherited, the basis is the value of the stock on the date of the original owner's death. If received as a gift, the basis is the amount that was originally paid for the investment by the giver, unless the market value of the investment on the date the gift was given was lower. also called cost basis or tax basis.
2. The difference between the cash price and the futures price of a given commodity.

Use basis in a sentence

When John sold his rental property that he had bought in a 1031 exchange, he suddenly had to pay taxes on both appreciation and his basis.

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I told him that this would be the basis for our new film that we would be shooting over the next few months.

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If you were to one day acquire stocks as a gift from a family member or close friend, your cost basis would be the fair market value of that stock on the day you received it

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