Glossary Terms

tax basis

« Back to Glossary Index

Tax basis, also known as cost basis, refers to the value of an asset for tax purposes. It is essentially the amount a taxpayer paid for a piece of property—something like stock, land, or inventory—as adjusted up or down for subsequent tax events like depreciation.

Tax basis is used to calculate gains or losses when an asset is sold, which in turn determines the amount of tax owed on a transaction.