What is cost basis and why is it important?
Cost basis is the original cost of an asset that may have been adjusted for various reasons such as stock splits, wash sales and return of capital distributions. It is important for tax purposes because the cost basis is part of the calculation to determine the amount of capital gain/loss from the sale of the asset. This information is generally required to be reported by the taxpayer on Schedule D (Form 1040), Capital Gains and Losses.
Related Questions
- During 2010, I sold fund shares inherited from my parents. Will cost basis and gain/loss information from this sale be shown on my 2010 Average Cost Accounting Statement?
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