Cost basis is the original amount you paid for an investment, including any commissions or fees. It’s used to calculate your profit or loss when you sell. Practical example: 1) Buy 100 shares at $20 with a $5 commission. Cost basis = 100×$20 + $5 = $2,005. 2) Later sell all 100 shares at $30 with a $5 commission. Proceeds = 100×$30 − $5 = $2,995. 3) Profit (gain) = Proceeds − Cost basis = $2,995 − $2,005 = $990. Different lots (shares bought at different prices) can complicate this; many brokers offer specific identification to choose which shares you’re selling. Tip: keep good records of purchase prices and fees, especially if you’ve bought at different times. Taxes vary by holding period and jurisdiction, so check with a tax advisor.

Cost basis is the original value of an asset for tax and accounting purposes. It includes the purchase price and any commissions, and it’s used to determine your gain or loss when you sell the asset.