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Calculate Cost Basis for Stock

Cost Basis Formula:

\[ \text{Cost Basis} = \text{Purchase Price} + \text{Commissions} \]

USD
USD

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1. What is Cost Basis?

The cost basis of a stock represents the original value of an asset for tax purposes, including the purchase price plus any additional costs like commissions or fees. It's used to determine capital gains or losses when the stock is sold.

2. How Does the Calculator Work?

The calculator uses the simple formula:

\[ \text{Cost Basis} = \text{Purchase Price} + \text{Commissions} \]

Where:

Explanation: The total cost basis includes all costs associated with acquiring the stock, not just the share price.

3. Importance of Cost Basis Calculation

Details: Accurate cost basis calculation is essential for determining capital gains taxes when you sell your investments. It helps minimize tax liability and maintain proper investment records.

4. Using the Calculator

Tips: Enter the purchase price per share and any commissions/fees paid. Both values must be non-negative numbers in USD.

5. Frequently Asked Questions (FAQ)

Q1: Does cost basis include dividends?
A: No, cost basis only includes the purchase price and direct acquisition costs. Reinvested dividends create new tax lots with their own cost basis.

Q2: How is cost basis different for mutual funds?
A: Mutual funds may have additional factors like load fees or reinvested capital gains that affect cost basis calculation.

Q3: What if I don't know the exact commissions?
A: Check your brokerage statements. If unavailable, you may need to estimate or contact your broker for historical records.

Q4: Does cost basis adjust for stock splits?
A: Yes, in cases of stock splits, the cost basis per share is adjusted proportionally while the total basis remains the same.

Q5: What about wash sales?
A: Wash sale rules may require adjustment to your cost basis if you repurchase substantially identical securities within 30 days of selling at a loss.

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