Financial Terms / C - D / Cost basis

Cost basis

The cost basis is the original value of an asset at the time of purchase. This purchase price is adjusted for corporate events such as dividends, stock splits, and buybacks. For example, if you had bought Google ($GOOG) stocks for $1000 at an average of $100/stock, then your cost basis is $100.

The cost basis has tax implications as it shows how much capital gains you have made by subtracting the cost basis from the selling price/current market value.