Basis

Definition

• Cost basis is the monetary value assigned to an asset from which a taxpayer determines capital gain or loss. For assets purchased, the basis is the price paid by the purchaser. Special rules apply to assets acquired through gift or inheritance, as well as to the value of stock funds held for a period during which earnings are reinvested.
• Something that underlies, supports, or is essential to something else, especially in reference to an abstract idea.

Synonyms
starting point, base, beginning, foundation

Related Terms and Acronyms

• Adjusted Basis — Definition,
  • The amount you use to determine your profit or loss from a sale or exchange of property.
• Adjusted Cost Basis — Definition,
  • The amount paid for an item, plus the amount paid for improvements, minus losses and depreciation. When the owner sells the item, the difference between the sales price and the adjusted cost basis is the profit or loss.
• Basis Point (BPS) — Acronym, Very Important,
  • A unit of measure: 1/100th of one percent. For example, the difference between a 9.0% loan and a 9.5% loan is 50 basis points.
  ➥ Used by mortgage brokers and lenders when discussing mortgage rates and determining commissions.
• Capital Gain (CG) — Acronym, Important,
  • The profit made by the seller when real estate or other capital assets are sold. Capital gains are taxed more favourably than earned income. However, this can be dependent on your tax bracket and the length of time you owned the asset before it was sold. You could pay approximately one-third to one-half less tax than you would pay on the same amount of earned salary.
• Capital Loss — Definition,
  • When an asset is sold for less than what you paid, or less than its adjusted basis, it is a capital loss. However, when it comes to taxes a capital loss is not always bad because you can use it to reduce the amount of income being taxed by the amount of the loss, up to $3,000 per year. If your loss is more significant, the excess (or capital loss carryover) can be carried forward indefinitely until the total loss is used.
• Cost Basis — Definition,
  • The original price paid for an investment which is also known as the basis or tax basis. The cost basis includes any commissions or fees paid when the investment was purchased.
• Valuation — Definition,
  • The estimation of a property's price value through an appraisal.
  • The process of finding the worth of an asset or business.