Cost Basis

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The cost basis of an asset is calculated as the purchase price of the asset, the total amount initially invested in the asset, or the value of the asset when it was received or earned. Cost basis takes into account dividends, stock splits, and distributions.

Cost basis is most commonly calculated using the average cost basis method, which divides the total amount invested by the number of shares owned. Cost basis is primarily used to calculate capital gains and losses for tax purposes.